proposal in relation to a scheme of arrangement · proposal in relation to a scheme of arrangement...

Proposal in relation to a

SCHEME OF ARRANGEMENT

Pursuant to Section 210 of the Companies Act

(Chapter 50, 2006 Revised Edition)

Between

Hyflux Engineering Pte Ltd

(Incorporated and registered under the laws of the

Republic of Singapore with Unique Entity Number 200009792D)

and

THE SCHEME PARTIES

(as defined in the Scheme)

EXPLANATORY STATEMENT

THIS EXPLANATORY STATEMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. It contains important information and should be read in its entirety. If you are in doubt about any aspect of the proposed Scheme and/or the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately.

Unless otherwise defined herein or the context otherwise requires, capitalised expressions used shall have the meanings set out in Appendix A of this Explanatory Statement.

Scheme Meetings of each class of the Scheme Parties to consider and, if thought fit, approve the proposed Scheme will be held on 8 April 2019 at Hyflux Innovation Centre, 80 Bendemeer Road, Singapore 339949, or such other place as may be fixed by the Company and notified to Scheme Parties via SGXNet. The actions that the Scheme Parties should take in relation to the Scheme are set out in Section 4 of this Explanatory Statement. As a Scheme Party, whether or not you intend to be present at the relevant Scheme Meeting, you are requested to complete and return the Proof of Claim enclosed with this Explanatory Statement by the Record Date in accordance with the instructions and notes contained therein. Any previously completed and submitted Proofs of Claim that have been sent to the Company or the Chairman will remain valid unless you have instructed the Chairman in writing to the contrary.

Subject to applicable law and as provided in this Explanatory Statement, the Company may, prior to the calling of any Scheme Meeting, delete, modify, amend or add to the terms of the proposed Scheme which the Company, upon further consultation with the Scheme parties as necessary or relevant, may think fit for the implementation of the Restructuring. Details of any deletion, modification, amendment and/or addition will be announced to all Scheme Parties via SGXNet as soon as reasonably practicable after the relevant decision is made.

Prior to making a decision on whether to approve the Proposal (as defined herein), you should carefully consider all of the information set forth in this Explanatory Statement. In particular, you should also take note of the risk factors set out in Section 9 of this Explanatory Statement.

Questions and requests for further information and assistance in relation to the proposed Scheme and/or this Explanatory Statement, including in respect of the submission or delivery of Proofs of Claim and/or Proxy Forms, may be directed to the Company through the following channels:

Telephone: +65 3517 7999 Email: [email protected]

Post: Hyflux Engineering Pte Ltd, Hyflux Innovation Centre, 80 Bendemeer Road, Singapore 339949

The date of this Explanatory Statement is 22 February 2019.

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TABLE OF CONTENTS

1. Introduction ...................................................................................................................................... 4

2. What is a Scheme of Arrangement?................................................................................................ 5

3. Scheme Parties and Scheme Claims .............................................................................................. 5

4. What are Scheme Parties required to do? ...................................................................................... 8

5. Background to the Scheme ............................................................................................................. 9

6. Financial Position of the Group ..................................................................................................... 12

7. Salient terms of the Scheme ......................................................................................................... 16

8. Interests of Directors ..................................................................................................................... 19

9. Risk Factors ................................................................................................................................... 19

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CONTACTS

The Chairman of the Court Meeting

and Proposed Scheme Managers

Ms Angela Ee c/o Ernst & Young Solutions LLP, or in the alternative,

Mr Glenn Peters c/o Ernst & Young Solutions LLP

Address One Raffles Quay, North Tower, Level 18, Singapore 048583

Email [email protected]

KEY DATES AND EXPECTED TIMETABLE1

Publication and issuance of notice to lodge Proofs of Claim 1 February 2019

Publication and issuance of notice to convene Scheme Meeting

22 February 2019

Last day to lodge Proofs of Claim 1 March 2019

Publication of list of Scheme Parties who have filed Proofs of Claim

8 March 2019

Last day to lodge Proxy Forms 72 hours before the relevant Scheme Meeting

Scheme Meetings 8 April 2019 (time to be announced

later)

Court hearing to sanction the Scheme (if approved at the Scheme Meetings)

Any day between 8 April 2019 to 15 April 2019 [tentative]2

Scheme Effective Date X3

Extraordinary general meeting of shareholders (EGM) Any day between 12 April 2019 to 15 April 2019 [tentative]4

Long-Stop Date in Restructuring Agreement 16 April 20195

End of moratorium ordered in 211B Proceedings 30 April 2019

1 Scheme Parties will be kept advised of any significant change(s) to the above expected timetable via

SGXNet. 2 This date cannot be finalised at this point as: (i) the Company will only apply to the Court for the sanction

of the Scheme after the Scheme is approved at the Scheme Meetings; and (ii) the date of the Court hearing to sanction the Scheme will only be confirmed based on the Court’s schedule after such application has been made. Scheme Parties will be kept advised of the actual date fixed for the Court hearing to sanction the Scheme via SGXNet.

3 The Scheme Effective Date is the date on which the order of Court sanctioning the Scheme is lodged with ACRA. This date cannot be finalised at this point as it depends on the date of the Court hearing to sanction the Scheme.

4 This is the estimated date of the EGM for ordinary shareholders of Hyflux to approve the issuance of Hyflux Shares to: (i) the Investor, in consideration of the Investor’s S$400 million investment pursuant to the terms of the Restructuring Agreement; and (ii) certain Scheme Parties under the Hyflux Scheme

5 This is the latest date by which all Conditions Precedent under the Scheme must be satisfied.

4

Hyflux Engineering Pte Ltd

80 Bendemeer Road

Hyflux Innovation Centre

Singapore 339949

(Incorporated and registered under the laws of the Republic of Singapore with Unique Entity

Number 200009792D)

EXPLANATORY STATEMENT

To: the Scheme Parties

22 February 2019

THIS EXPLANATORY STATEMENT CONCERNS MATTERS WHICH MAY AFFECT YOUR

LEGAL RIGHTS AND ENTITLEMENTS AND YOU MAY THEREFORE WISH TO TAKE

APPROPRIATE LEGAL ADVICE ON ITS CONTENTS

Dear Sir/Madam,

Proposed scheme of arrangement (“Scheme”) in relation to Hyflux Membrane Manufacturing

(S) Pte Ltd (“Company”) under Section 210 of the Companies Act (Chapter 50, 2006 Revised

Edition) of the Republic of Singapore (“Act”)

1. INTRODUCTION

1.1. On 22 May 2018, Hyflux Ltd (“Hyflux”) announced that applications have been made to the

Court pursuant to Section 211B(1) of the Act to commence a court supervised process to

reorganise the liabilities and businesses of itself and four (4) of its subsidiaries, namely,

Hydrochem (S) Pte Ltd, the Company, Hyflux Membrane Manufacturing (S) Pte Ltd and Hyflux

Innovation Centre Pte Ltd (“211B Proceedings”)1.

1.2. Thereafter, Hyflux conducted a competitive process to pursue strategic investments in the

overall business of the Group as part of the Restructuring. On 18 October 2018, Hyflux

announced that it had entered into a restructuring agreement2 (“Restructuring Agreement”)

with SM Investments Pte Ltd (“Investor”). Pursuant to which the Investor would, among other

things:

1.2.1. subscribe for such number of Shares representing 60% of the issued share capital

of Hyflux for an aggregate subscription amount of S$400,000,000; and

1.2.2. grant Hyflux a loan of a principal amount of S$130,000,000 under a loan agreement

dated 18 October 2018 entered into between Hyflux and the Investor 3 (“Loan

Agreement”).

1 More information on the Restructuring can be accessed at: https://www.hyflux.com/financial-

reorganisation-exercise/ 2 A copy of which is set out under Appendix B of this Explanatory Statement. 3 A copy of which is set out under Appendix C of this Explanatory Statement.

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1.3. In connection with the Restructuring and as contemplated under the Restructuring Agreement,

the Company intends to enter into a compromise and arrangement with the Scheme Parties

in respect of all Scheme Claims pursuant to the terms of the Scheme.

1.4. For a snapshot of the effect of the Scheme, the payouts thereunder and the expected

returns, please refer to Appendix G of this Explanatory Statement. The purpose of this

Explanatory Statement is to inform the Scheme Parties of the background and effect of the

Scheme. It is written and issued pursuant to Section 211 of the Act and in accordance with

the applicable procedure and guidance laid down in the Act and by the Court. Unless

otherwise defined herein or the context otherwise requires, capitalised expressions used shall

have the meanings set out in Appendix A of this Explanatory Statement.

1.5. Please note that this Explanatory Statement does not form the basis of the legal contract

between the Company and the Scheme Parties. The legally binding contract between the

Company and the Scheme Parties in the event the proposed scheme of arrangement is

approved by the Scheme parties and sanctioned by the Court is the Scheme. The

Company has prepared this Explanatory Statement on a best efforts basis, but make no

warranty as to the accuracy or completeness of the information provided herein. The

Company reserves the right to amend or supplement this Explanatory Statement and/or

the information contained herein.

2. What is a Scheme of Arrangement?

2.1 A scheme of arrangement is a statutory procedure under Singapore law which allows a

company to agree a compromise or arrangement with parties to whom it owes obligations

towards (or classes of parties), and for the terms of that compromise or arrangement to bind

any non-consenting or opposing minority parties.

2.2 A scheme of arrangement becomes effective if:

2.2.1 it is approved by a majority in number (above 50%) representing at least 75% in

value of each class of Scheme Parties present and voting at each scheme meeting;

2.2.2 it is sanctioned by the Court; and

2.2.3 a sealed copy of the order of Court sanctioning the scheme of arrangement is lodged

with ACRA.

2.3 If the scheme of arrangement becomes effective, it will bind the Company and all the scheme

parties according to its terms, including those scheme parties who did not vote on the scheme

or who voted against it, irrespective of where in the world those scheme parties reside or have

their seat.

3. Scheme Parties and Scheme Claims

3.1 The Scheme is intended to bind the Company and the following classes of Scheme Parties in

respect of their Scheme Claims:

3.1.1 the General Claimants who hold General Trade Claims and Other Claims; and

3.1.2 the Subordinated Scheme Parties who hold Subordinated Scheme Claims.

3.2 For the avoidance of doubt, the Scheme will not affect any Claim of a Scheme Party that is

an Excluded Claim.

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General Claimants

3.3 The General Claimants comprise of the General Trade Claimants, who hold General Trade

Claims, and the Other Claimants, who hold Other Claims.

3.4 The aggregate outstanding principal amount of all General Trade Claims is approximately

S$15.79 million.

3.5 A list of the General Trade Claimants based on the records of the Company with approximate

values of their General Trade Claims is set out below:

General Trade Claimant Approximate Value of General Trade Claim (in S$4)

Siemens Pte Ltd 6,322,667.20

NAES SG Pte Ltd 5,986,757.04

Certis CISCO Auxiliary Police Force Pte Ltd 500,465.74

Chemical Industries (Far East) Limited 440,501.65

Asia Projects Engineering Pte Ltd 348,133.31

Hitachi Plant Construction Ltd 203,819.52

Chlor-Al Chemical Pte Ltd 160,333.76

KSB Singapore (Asia Pacific) Pte Ltd 154,231.21

ABB Pte Ltd 89,342.09

Skychem Pte Ltd 85,814.00

Say Guan Transport Services 82,800.72

Linde Gas Singapore Pte Ltd 81,630.62

Master Marine Works Pte Ltd 73,790.00

Air Liquide Singapore Pte Ltd 64,452.61

Rhinetech Pte Ltd 50,511.63

JM Pang & Seah (Pte) Ltd 48,862.91

Certis Technology (Singapore) Pte Ltd 42,725.10

BHT Air Conditioning and Maintenance Services 42,058.55

Sealflow Engineering Pte. Ltd. 38,250.90

LHOIST SG PTE LTD 35,226.76

BS Technology Pte Ltd 31,319.30

SPCI Pte. Ltd. 31,075.10

AUMA Actuators (S) Pte Ltd 30,644.81

Mun Siong Engineering Limited 28,968.11

SLS Bearings (S) Pte Ltd 28,158.70

Team-6 Safety Training & Consultancy (S) Pte Ltd 28,105.71

AECO Plant Engineering Pte Ltd 27,901.32

Ingersoll-Rand South East Asia (Pte) Ltd 27,753.65

KPMG LLP 25,500.00

Torishima Service Solutions Asia Pte Ltd 24,223.60

Feesiko Unique Solutions Pte Ltd 24,146.64

Koso Controls Asia Pte Ltd 21,635.40

4 All sums denominated in US$ are converted to S$ based on a conversion rate of US$1 = S$1.3221.

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Endress & Hauser (S.E.A.) Pte Ltd 20,531.71

Mitsubishi Corporation Singapore Branch 19,257.47

Seals Technology Asia Pacific Pte Ltd 18,345.15

Pall Filtration Pte Ltd 18,107.96

Tat Soon Metal Works Pte Ltd 17,333.99

Shanghai K-Zone Import&Export Co., Ltd 17,019.32

Willsun Pacific Pte Ltd 16,585.00

Multiheight Scaffolding Pte Ltd 14,809.55

Interwell Pte Ltd 14,777.49

Avatec Power Pte Ltd 14,376.52

Evergloss Pte Ltd 14,300.00

Tyco Fire, Security & Services Pte Ltd 14,231.92

Megachem Limited 13,642.50

Penta-Chem Services Pte Ltd 13,054.00

Sulzer Singapore Pte Ltd 12,860.66

Ernst & Young Solutions LLP 12,041.69

Atom-Drive Pte Ltd 11,973.30

I-Spray Pte Ltd 11,715.76

PEC Ltd 11,663.00

Kurita (Singapore) Pte. Ltd. 11,074.50

OVS Engineering Pte Ltd 10,610.12

Metrohm Singapore Pte Ltd 10,369.93

P.A. International Pte. Ltd. 9,820.93

Imperial Royal Pte Ltd 9,480.20

Singapore Environmental Consultancy and Solutions Pte Ltd 9,416.00

Comm-IT Consultancy Services Pte Ltd 9,170.34

Brighton Maintenance & Cleaning Services 8,757.90

Atlas Copco (South-East Asia) Pte Ltd 8,622.86

Hup Hin Transport Co. Pte Ltd 8,560.00

Unigrade Trading Pte Ltd 8,243.28

HX Waste Management Pte Ltd 8,238.18

Anticimex Pest Management Pte Ltd 8,204.34

Boerger Pumps Asia Pte Ltd 8,121.02

Intertek Testing Services (Singapore) Pte Ltd 8,000.30

Multico Equipment & Parts Pte Ltd 7,922.30

Speed Aire (M&E) Engineering Pte Ltd 7,205.10

Thye Hong Esolutions Pte Ltd 7,114.22

Crimson (S) Pte Ltd 7,067.69

GPA Engineering Corporation Pte Ltd 7,062.00

Stanley Security Singapore Pte Ltd 6,965.70

Leroy-Somer (S.E.A) Pte Ltd 6,753.44

Ace Sysmec Pte Ltd 6,634.00

Kumpulan Development (S) Pte Ltd 6,247.82

Air Parts Centre Pte Ltd 5,951.22

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Exion Asia Pte Ltd 5,907.47

Seng Choon Engineering Pte Ltd 5,806.25

Total 15,794,919.95

3.6 Included in the General Trade Claims is the following Claim which is to be included in the

Scheme despite not being as at 22 May 2018 a legally valid and binding debt of a definite

amount then actually due from the Company:

Name Nature of claim

NAES SG Pte Ltd Disputed amount demanded from Company

under a contract entered into on 2 March 2012

and claimed to be extended until 9 November

2021

3.7 At present, the Company is not aware of any person who may claim to have an Other Claim

against the Company.

Subordinated Scheme Parties

3.8 The Subordinated Scheme Parties comprise of the Intercompany Claimants and the HS

Claimants, who hold Intercompany Claims and HS Claims, respectively.

3.9 The aggregate outstanding principal amount of all Subordinated Scheme Claims is

approximately S$79.8 million.

4. What are Scheme Parties required to do?

4.1 If you are a Scheme Party, you are entitled to vote at the relevant Scheme Meeting for the

purpose of approving the Scheme in the manner set out in paragraphs 4.2 to 4.3 below. The

Scheme Meetings will be held on 8 April 2019 at Hyflux Innovation Centre, 80 Bendemeer

Road, Singapore 339949, or such other place as may be fixed by the Company and notified

to Scheme Parties via SGXNet.

4.2 A Scheme Party may attend the relevant Scheme Meeting in person or may vote by proxy.

4.3 Please note that the terms of the Scheme prescribe that no assignment, sale or transfer of

any interest in any Scheme Claim after the Record Date shall be recognised by the Company

or the Chairman after the Record Date for the purposes of determining entitlement to attend

and vote at the Scheme Meetings. Persons who hold Scheme Claims against the Company

as at the Record Date shall be the Scheme Parties. A transferee of an interest in a Scheme

Claim after the Record Date will not be entitled to vote at the Scheme Meetings. Such

transferee will need to make arrangements with the transferor to ensure that the transferor

votes in accordance with the wishes of the transferee. Persons who have acquired an interest

in a Scheme Claim after the Record Date should contact the person from whom they acquired

such an interest to ensure distribution of the relevant Scheme Consideration to them or their

nominee pursuant to the terms of the Scheme. The Company and the Chairman accept no

responsibility or liability in respect of such matters whatsoever.

4.4 There is enclosed at Schedule 4 of the Scheme and Appendix D of this Explanatory Statement

the relevant Proof of Claim forms to be submitted by the respective Scheme Parties to the

Chairman in respect of a Scheme Claim.

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4.5 If a Scheme Party wishes to vote at the relevant Scheme Meeting, such a Scheme Party must

complete and return the Proof of Claim to the address specified in the relevant Proof of Claim

form by the Record Date (that is, 5:00 pm, 1 March 2019 (Singapore Standard Time)). Please

note that any Scheme Party may be barred from voting at the Scheme Meeting for Unsecured

Scheme Parties if he or she fails to submit his or her Proof of Claim by the Record Date.

4.6 There is enclosed at Appendix E herein a Proxy Form for all Scheme Parties be submitted to

the Meeting Agent. The relevant instructions for completing and submitting the Proxy Form is

set out therein. If a Scheme Party wishes to appoint a proxy to attend the relevant Scheme

Meeting and vote, such Scheme Party must complete and sign the Proxy Form enclosed in

accordance with the instructions contained therein and lodge the Proxy Form with the Meeting

Agent and in any event at least seventy-two hours (72) hours before the time fixed for the

Scheme Meeting.

4.7 Please note that if a Scheme Party fails to lodge a Proxy Form by the stipulated deadline, the

proxy or proxies of such Scheme Party shall not be entitled to vote at the relevant Scheme

Meeting unless so admitted to vote at the discretion of the Chairman.

5. Background to the Scheme

Background to the Restructuring5

5.1 The oversupply of gas in the Singapore market resulted in depressed electricity prices which

adversely impacted the Group's financial performance since 2016. The impact of the weak

Singapore power market, coupled with an increase in the reserve margin required by the

Energy Market Authority, drove the Group to losses in the first quarter of 2018.

5.2 This was compounded by challenges on the repatriation of monies into Singapore from

projects overseas, as well as increased amount of monies which had to be placed in fixed

deposit accounts as a requirement for performance bonds to be issued or renewed in support

of the existing projects.

5.3 To address these challenges, preserve value and maintain a sustainable capital structure, the

Board took the view that a transparent and court supervised reorganisation process was in

the best interests of all of the Company’s stakeholders and hence applied to the Court to

commence the Restructuring.

Steps taken during the Restructuring6

5.4 As part of the Restructuring, the Group has:

5.4.1 adopted various austerity measures to limit costs and expenses of the Group during

the Restructuring;

5.4.2 conducted a controlled divestment exercise in respect of its interests in the

Tuaspring IWPP, which yielded a single conditional offer at a price below the value

5 More information on the background to the Restructuring can be found at paragraphs 10 to 17 of the 1st

Affdiavit of Lum Ooi Lin dated 15 February 2019 which was filed in the Scheme Proceedings and which can be accessed at: https://www.hyflux.com/financial-reorganisation-exercise/info-on-court-process/

6 More information on the solutions implemented during the Restructuring can be found at paragraphs 20 to 45 of the 1st Affdiavit of Lum Ooi Lin dated 15 February 2019 which was filed in the Scheme Proceedings and which can be accessed at: https://www.hyflux.com/financial-reorganisation-exercise/info-on-court-process/

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of the secured debt of the project finance lender (“Tuaspring Divestment

Exercise”);

5.4.3 conducted a competitive exercise to pursue strategic investments in the overall

business of the Group (“Investor Search Process”), which culminated in the

execution of the Restructuring Agreement with the Investor as described above at

paragraphs 1.2 and Error! Reference source not found.;

5.4.4 divested its interest in 150,000 shares of PT Oasis Waters International in

consideration of S$32 million as part of the Group’s efforts to streamlines its

business activities, improve liquidity and focus on its core activities in the

infrastructure sector;

5.4.5 executed a definitive binding settlement agreement with the MHI Group (its minority

shareholder in TuasOne Pte Ltd and sub-contractor for the construction of the

TuasOne WTE Project) on 15 February 20197 (“MHI Settlement Agreement”) to

resolve certain disputes between the Group and the MHI Group in respect of the

TuasOne WTE Project, and to pave the way forward for the completion of the

TuasOne WTE Project; and

5.4.6 negotiated with the bank lenders under the TuasOne Facility for the establishment

of a trust account and the resumption of drawdowns under the TuasOne Facility so

as to ensure continued liquidity for the purposes of constructing the TuasOne WTE

Project (such negotiations are still ongoing at present).

Tuaspring Divestment Exercise

5.5 The divest process of the Tuaspring IWPP, which started in January 2017 was resumed as a

collaborative consensual sale process with Malayan Banking Berhad (“Maybank”), the sole

secured lender to Tuaspring Pte Ltd (who holds security over the Tuaspring IWPP). A

competitive bidding exercise was carried out to yield the highest possible market price, and in

turn, increase the recovery for the Group’s stakeholders.

5.6 The Group worked closely with the offtaker (the Public Utilites Board) and other interested

parties to maximise the number of pre-qualified bidders for the Tuaspring IWPP. However,

ultimately, of the two pre-qualified parties, only one proceeded to make a bid and that bid was

subject to conditions which, even if met, would have not meant recovery sufficient to repay

the debt of the sole secured lender, Maybank.

5.7 Following the entry into of the Restructuring Agreement, which is premised upon the Group’s

rentention of its interests in the Tuaspring IWPP, no active efforts to pursue the divestment

are being made. That said, the original agreed upon deadline for entering into a divestment

agreement with the highest bidder for the asset has been extended with Maybank’s approval

on several occasions and is now 28 February 2019. Therefore, the Hyflux board of directors

remains open to, and will consider, any offer that is made for the acquisition of the Tuaspring

IWPP. To-date, no offer has been received.

Investor Search Process

7 More information on the MHI Settlement Agreement can be found from the Company’s announcement

on SGXNet dated 15 February 2019. A copy of the MHI Settlement Agreement is set out under Appendix F of this Explanatory Statement.

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5.8 Following the commencement of the 211B Proceedings, the Group undertook an intensive

search process for a strategic investor. This included seeking out potential investors from past

interest indicated, and engaging in discussions with investors who approached the Group or

its advisors following the Applications.

5.9 In the light of the high profile of the Group and the media attention received by the 211B

Proceedings, there were multiple unsolicited potential investors who approached the Group.

All such options were considered, and the Group also took steps to actively seek out potential

investors who may have had an interest in investing in the Group to seek out the best option

available for stakeholders.

5.10 This search process for a strategic investor yielded 16 potential parties with whom further

rounds of discussions commenced after non-disclosure agreements were entered into. These

further rounds of discussions included provision of an information memorandum outlining the

profile of the Group, including its business and capabilities, financial status, and funding needs

for the potential strategic investors to consider. Parties involved at this stage included

American, European, Mainland Chinese and Southeast Asian parties as well as private equity

funds.

5.11 Following these initial rounds of discussions, further discussions continued with 8 interested

parties. After initial due diligence, the Group considered the various offers presented to the

Group. The offers made ranged from a total investment of S$400 million to S$600 million (with

the equity portion ranging from S$250 million to S$530 million for an equity stake ranging from

approximately 51% to 86.4% of the Company’s shareholding).

5.12 After several discussions with the potential investors, the offers were developed. In particular,

the offer from the Investor was amended to significantly increase the initial equity injection

from the Investor.

5.13 The criteria considered in deciding on accepting the offer from the Investor included:

5.13.1 the value of the investment;

5.13.2 the conditions imposed by the offeror/certainty of the offer;

5.13.3 the financial ability of the offeror to complete the investment;

5.13.4 the timing within which the offeror could complete (bearing in mind the liquidity

crunch); and

5.13.5 the offeror’s synergies with Hyflux which could effectively revitalise the business.

5.14 Based on these criteria, and the circumstances, including the market conditions, the Hyflux

board of directors resolved that it was in the best interests of the various stakeholders that the

Group enter into the Restructuring Agreement with the Investor on 18 October 2018.

5.15 In this regard, the Restructuring Agreement and the proposed Scheme, as part of the wider

Restructuring, is intended to serve a dual function:

5.15.1 comprehensively restructure the Group's financial obligations. The Restructuring

allows the Company to comprehensively restructure its obligations with the Scheme

Parties in a way that would significantly reduce the financial burden on the Company

and alleviate pressures faced by the Company on its cash flow; and

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5.15.2 enable the Group to reorganise and streamline its operations, focus on areas for

growth and create value for its stakeholders. In this regard, the Company has been

pursuing potential strategic investments for the Group. In line with this business

objective, the Restructuring will enable the Company to maximise the value of the

Group for both its creditors and shareholders, and to ensure the long-term

sustainability and competitiveness of the Group with a view to deliver value to its

shareholders and other stakeholders.

6. Financial Position of the Group

6.1 As part of the orders issued by the Court in the 211B Proceedings, the Group has been and

continues to provide updates by regularly filing and publishing monthly management accounts

of the applicants in the 211B Proceedings8.

6.2 The unaudited management accounts of Hyflux as at 31 December 2018 are set out below:

Statement of financial position

As at 31 Dec 2018

ASSETS S$’000

Subsidiary companies 278,874

Associates and joint ventures 23,103

Other investment 20,000

Trade and other receivables 868,225

Non-current assets 1,190,202


Cash and cash equivalents 57,879

Current assets 995,934

Total assets 2,186,136

LIABILITIES S$’000

Trade and other payables 127,293

Loans and borrowings 435,227

Tax payable 4,473

Current liabilities 566,993

Net current assets 428,941


Non-current liabilities 411,481

Net assets 1,207,662

8 These monthly management accounts are exhibited in the affidavits which can be accessed at:

https://www.hyflux.com/financial-reorganisation-exercise/info-on-court-process/

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Equity S$’000

Share Capital 607,258

Treasury Shares (85,929)

Perpetual Capital Securities 494,798

Reserves 36,977

Accumulated profit 154,558

1,207,662

6.3 The unaudited management accounts of the Hydrochem as at 31 December 2018 are set out

below:


As at 31 Dec 2018

ASSETS S$’000

Property, plant and equipment 1,534

Intangible assets 15,828

Subsidiaries 45,549

Deferred tax assets 33,271

Trade and other receivables 403

Non-current assets 96,585



Construction contract in progress 386,525

Inventories 1,548


Total assets 726,446








Net assets (86,474)

Equity S$’000

Share Capital 74,000

Reserves (1,255)

Accumulated losses (159,219)

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(86,474)

6.4 The unaudited management accounts of HMM as at 31 December 2018 are set out below.


As at 31 Dec 2018

ASSETS S$’000

Property, plant and equipment 12,847

Other investment 9,582



Cash and cash equivalents 846

Construction contract in progress 28,989

Inventories 32,309









Net assets (7,232)

Equity S$’000

Share Capital 1,000

Reserves 10,861

Accumulated losses (19,093)

(7,232)

6.5 The unaudited management accounts of the Company as at 31 December 2018 are set out

below:


As at 31 Dec 2018

ASSETS S$’000

Property, plant and equipment 641

Subsidiaries 36,526


15




Inventories 1,466





Current tax payable 1,277


Net current assets (66,915)

Loans from holding company 4,893

Deferred tax liabilities 53


Net assets 7,597

Equity S$’000

Share Capital -

Capital reserves 378

Accumulated profits 7,219

7,597

6.6 While the Group is currently facing financial difficulties, the Hyflux board of directors believes

that the Group has a viable business and may continue business as a going concern if its

current financial obligations and liabilities are restructured and/or compromised and the

contemplated Investment under the Restructuring Agreement is completed.

6.7 The Board believes that the Restructuring pursuant to the terms of the Restructuring

Agreement and the proposed Scheme would benefit all stakeholders, who would receive a

greater return under the Scheme than under a winding up of the Company.

6.8 It is estimated that if the Company is placed into winding up, each General Claimant would

only stand to realise 4.0% to 15.0% of their General Claims. A copy of the liquidation analysis

prepared by Ernst & Young Solutions LLP can be found under Appendix H of this Explanatory

Statement.

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7. Salient terms of the Scheme

Claims and approval process

7.1 The notice to file the relevant Proof of Claim required under the Act to participate in the Scheme Meetings and to receive payments under the Scheme was published on 1 February 2019. The deadline to file Proofs of Claim is the Record Date (5:00 pm, 1 March

2019).

7.2 If you are a Scheme Party:

7.2.1 You should lodge a Proof of Claim by completing the relevant form provided at https://www.hyflux.com/financial-reorganisation-exercise/proof-of-claims/ in

accordance with the instructions therein by the Record Date;

7.2.2 Await adjudication of Proofs of Claim by the Chairman of the Scheme Meetings.

The results will be announced by 15 March 2019;

7.2.3 If you wish to, you may request to inspect the Proofs of Claim filed by other Scheme Parties by 20 March 2019. To do so, you must send such request in writing to the Chairman and a written notice of the request to the Company and the affected Scheme Party/Parties.

7.2.3.1 within 3 days of receiving any such request, the party whose Proof of Claim is sought to be inspected will inform you if he or she objects

to your request;

7.2.3.2 where the party objects, you can send a written notice within 3 days of receiving the response to: (i) ask for agreement on appointment of an Independent Assessor to decide on the issue of whether the Proof of Claim will be allowed to be inspected; or (ii) apply to Court for the appointment of an Independent Assessor where no such agreement is arrived at. In such written notice or application, you must nominate an Independent Assessor and state the dispute that

the Independent Assessor (if appointed) is to decide on;

7.2.3.3 After the Independent Assessor is appointed, the Chairman must provide the relevant Proof of Claim to him or her as soon as practicable. The Independent Assessor must, not later than 7 days after being provided with the relevant proof of claim: (i) make a decision on the dispute, and (ii) send a written notice of the decision along with reasons to the Chairman, the Company, and the parties

involved in the dispute.

7.2.4 If you wish to, you may object to the Chairman’s adjudication of your Proof of Claim or another Scheme Party’s Proof of Claim at a time no later than 22 March

2019.

7.2.4.1 If there is any such objection, you may: (i) write to the Company, the Chairman and the Scheme Party whose Proof of Claim will be affected (if applicable) to ask for agreement on appointment of an Independent Assessor; or (ii) apply to Court for the appointment an Independent Assessor by the Court under the Act where no such agreement is arrived at. In such written notice or application, you must nominate an Independent Assessor and state the dispute that

the Independent Assessor (if appointed) is to decide on.

7.2.4.2 After the appointment of an Independent Assessor, the Chairman will provide as soon as practicable the relevant Proof of Claim to the

Independent Assessor.

17

7.2.4.3 After the Independent Assessor has been provided the Proof of Claim, he must, not later than 7 days after the Chairman provides him the Proof of Claim: (i) make a decision on the dispute, and (ii) send a written notice of the decision along with reasons to the

Chairman, the Company, and the parties involved in the dispute.

7.2.5 On the day of the Scheme Meetings, the Chairman will provide each Scheme Party with a copy of the updated list of Scheme Parties with Accepted Scheme

Claims.

Excluded Claims

7.3 For the purposes of the Scheme, the following Claims are Excluded Claims that will not be affected by the Scheme:

7.3.1 Any Claim of Tuaspring Pte Ltd as any such compromise or arrangement is

prohibited under the terms of the security arrangement with Maybank.

7.3.2 Any Claim which is is not as at 22 May 2018 a legally valid and binding debt of a definite amount then actually due from the Company, save for Claims set out in Schedule 2. Claims that arise after 22 May 2018 (other than those set out in Schedule 2) relate to critical payments of the Company which the Company intends to pay in full.

7.4 Further, any Liability of the Company of a monetary value of less than or equals to S$5,000

will not be captured under the Scheme, as these Liabilities will be paid off in full.

Scheme Effectiveness

7.5 The Scheme shall become effective on the date the Court order sanctioning the Scheme (after it has been approved by the Scheme Parties) is registered with ACRA.

7.6 The continued effectiveness of the Scheme is contingent upon Completion under the Restructuring Agreement. This is in turn contingent upon the satisfaction and waiver of all Conditions Precedent, including: (i) the approval by the shareholders of Hyflux and SGX-ST for the listing and quotation of the new Hyflux Shares to be issued by Hyflux to the Investor and certain parties that are to receive equity payouts under the Hyflux Scheme; and (ii) Hyflux obtaining the necessary whitewash waiver from the Securities Industries

Council.

7.7 If the investment contemplated under the Restructuring Agreement does not go through for any reason whatsoever, the Scheme shall be terminated and the compromise and arrangements thereunder shall be of no effect and shall be construed as if it had never

become effective.

Cash consideration under Scheme

7.8 $13 million has been allocated as at the Restructuring Effective Date to satisfy all claims

against Hydrochem, HE and the Company. This amount has been allocated between the

three entities based on an evaluation of the liquidation analysis to allow recovery, at the

first payout date, of at least as much as the high case in the liquidation scenario. Of this

S$13 million, approximately S$3.77 million has been allocated to the Company for the

purpose of the Scheme.

7.9 Each Subordinated Scheme Party will receive a nominal sum of $1 for its Subordinated

Claim.

18

Cash distribution under Scheme

7.10 Payments under the Scheme are expected to be as follows:

7.10.1 Payment of $1 to each Subordinated Scheme Party;

7.10.2 Distribution of S$3.77 million to all General Claimants on the Settlement Date in

the following manner:

7.10.2.1 Payment of $5,000 each to all General Claimants with Accepted

General Claims; and

7.10.2.2 a pro rata distribution of the remaining amount after payment under

paragraph 7.10.2.1 to all General Claimants with Accepted General

Claims based on the value of their respective Accepted General

Claim (after deducting S$5,000 from such value).

Discharge and Extinguishment of Scheme Claims

7.11 On the Scheme Effective Date, each Scheme Party shall give the undertakings, releases and waivers as set out in Clause 5 of the proposed Scheme.

7.12 For the avoidance of doubt, the undertakings, releases and waivers set out in Clause 5 do

not apply to Excluded Claims.

Remuneration of Scheme Manager

7.13 The Scheme Manager shall be remunerated according to what is fair, reasonable and adequate given the Scheme Manager’s roles and responsibilities set out in the scheme and prevailing market conditions. Based on the structure of the scheme, it is envisaged that the work to be done can broadly be divided into work that is: (i) complex and requires

considerable expertise or judgment; and (ii) time-intensive but generally less complex.

7.14 The first category (work involving considerable “value contribution”), includes the adjudication of proofs, conduct of the scheme meetings, attending to queries from Scheme Parties, re-basing and calculation of distributions under the Scheme (other than the initial distribution that is to be made 28 days after the Completion Date in the Restructuring Agreement), dealing with surplus amounts, addressing challenges to the Scheme Manager’s decisions. All disputes, court proceedings and matters involving an independent assessor as provided for under the Proof Regulations will be part of this

category.

7.15 This category of work will be remunerated on a time–incurred basis using standard hourly rates and handled by a team staffed at appropriate levels of seniority.

7.16 The second category of work involves more time spent especially in light of the varied nature of the obligations being schemed and the large number of Scheme Parties. This category includes administrative tasks, co-ordination of logistics and reconciling of documents and verification of data. This category also includes other tasks which do require more judgment to be exercised in addition to considerable man-hours such as the preparing of the various lists of creditors and the corresponding amounts that have been claimed, admitted and/or rejected, the review of supporting documents from Scheme Parties against the company’s records and following up on further documents and information required, computation and work associated with the initial distribution 28 days after the completion date in the Restructuring Agreement, computing the various subsequent cash payouts under the Scheme, and the facilitating of requests for inspection of Proofs of Claim.

19

7.17 This category of work will similarly be remunerated on a time–incurred basis using standard hourly rates and handled by a team staffed at appropriate levels of seniority but a discount will be applied on the total fees incurred.

8. Interests of Directors

8.1 The Company is not aware of any relevant interests of its directors as at the date of this Explanatory Statement.

9. Risk Factors

9.1 In considering whether to vote in favour of the Scheme, each Scheme Party should carefully consider all of the information contained in this Explanatory Statement and in particular the risk factor described below. There may be other risks other than that highlighted below, and Scheme Parties should also consider all other risks relevant in the

circumstances.

9.2 Risk of Scheme not being sanctioned by the Singapore Court: Even if the required majority of votes is secured from Scheme Parties in support of the Scheme (which cannot be assured) at the Scheme Meetings, the Scheme is still subject to the approval of the

Court.

9.3 Risk of Scheme not being approved by shareholders: Even if the Scheme is sanctioned by the Court, its effectiveness is nonetheless contingent on: (i) the approval by the shareholders of Hyflux and SGX-ST for the listing and quotation of the new Shares to be issued by the Company to the Investor and the Scheme Parties that are to receive equity payouts under the Scheme; and (ii) Hyflux obtaining the necessary whitewash

waiver from the Securities Industries Council (see above at paragraph 7.6).

Appendix A – Definitions

DEFINITIONS AND INTERPRETATION

In this Explanatory Statement, unless inconsistent with the subject or context, the following

expressions shall have the following meanings:

“211B Proceedings” means the applications for a moratorium under Section 211B(1) of the

Act filed by each of Hyflux, the Company, Hyflux Innovation Centre Pte Ltd, HMM and

Hydrochem, vide HC/OS 633/2018, HC/OS 634/2018, HC/OS 635/2018, HC/OS 636/2018

and HC/OS 638/2018, respectively, and all associated proceedings therein.

“Accepted” means, in relation to a Scheme Claim, the acceptance by the Chairman of such

Claim (or part thereof) for the purposes of determining entitlement to attend and vote at the

Scheme Meetings without dispute or, where applicable, the acceptance or determination by

the Independent Assessor of such Claim (or part thereof) for such purpose in accordance with

the Proof Regulations.

“ACRA” means the Accounting and Corporate Regulatory Authority of Singapore.

“Act” means the Companies Act, Chapter 50 of Singapore.

“Base Currency Conversion Rate” means the conversion rate of any foreign currency

denomination to dollars (S$) as published in The Business Times on 1 March 2019.

“Business Day” means a day (other than a Saturday, Sunday or public holiday) on which

commercial banks are open for business in Singapore.

“Chairman” means the chairman of the Scheme Meetings appointed pursuant to Section

211F(5) of the Act.

“Claim” means any Liability of the Company of a monetary value of more than S$5,000,

together with any of the following matters relating to or arising in respect of such Liability:

(a) any refinancing, novation, deferral or extension;

(a) any claim for breach of guarantee, representation, warranty and/or undertaking or an

event of default or under any indemnity given under or in connection with any document

or agreement evidencing or constituting any other Liability falling within this definition;

(b) any claim for damages or restitution; or

(c) any amounts which would be included in any of the above but for any discharge, non-

provability, unenforceability or non-allowance of those amounts in any insolvency or

other proceedings

“Company” means Hyflux Engineering Pte Ltd, a company incorporated in Singapore with

registration number 200009792D, whose registered office is located at 80 Bendemeer Road,

Hyflux Innovation Centre, Singapore 339949.

“Conditions Precedent” means the Conditions as defined in the Restructuring Agreement

and the Conditions Precedent as defined in the Loan Agreement.

“Constitutional Documents” means the Memorandum and Articles of Association and any

other constituent documents of the Company.

“Court” means the High Court of Singapore.

“Excluded Claim” means:

(a) any Claim of Tuaspring Pte Ltd; or

(b) any Claim which is not as at 22 May 2018 a legally valid and binding debt of a definite

amount then actually due from the Company, save for Claims set out in Schedule 2.

“Explanatory Statement” means the explanatory statement issued by the Company and

dated 22 February 2019 relating to the Scheme.

“Facilities” means the Facilities as defined in the Hyflux Scheme.

“Final Distribution Date” means the date on which all Scheme Consideration shall have

been issued and/or distributed (as applicable) to the Scheme Parties.

“General Claim” means the aggregate value of any Claim(s) of a General Trade Claimant or

an Other Claimant.

“General Claimants” means the General Trade Claimants and the Other Claimants.

“General Claims Cash Consideration” means cash of an amount equal to S$3,770,000.

“General Claim Cash Payout” means in respect of each Accepted General Claim, a cash

payout to be calculated in the following manner:

𝐺𝐶𝐶𝑃 = 𝑆$5,000 +𝑎 − 𝑆$5,000

𝑑 − 𝑆$5,000 × 𝑒× (𝐺𝐶𝐶𝐶 − 𝑆$5,000 𝑥 𝑒)

where:

a is the value of the subject Accepted General Claim;

d is the total value of all Accepted General Claims;

e is the total number of General Claimants;

GCCC is the General Claims Cash Consideration; and

GCCP is the General Claim Cash Payout for the subject Accepted General Claim, to be

rounded down to the nearest cent.

“General Trade Claim” means the aggregate value of any Claim(s) of a General Trade

Claimant that is not an Excluded Claim.

“General Trade Claimant” means any and each of the parties as set out in Schedule 1 as

supplemented, amended and restated from time to time.

"Group" means Hyflux and its Subsidiaries.

“HMM” means Hyflux Membrane Manufacturing (S) Pte. Ltd.

“HMM Scheme” means the scheme of arrangement proposed by HMM under Section 210 of

the Act in its present form or with or subject to any modifications, additions or conditions

approved or imposed by the Court or approved in accordance with its terms.

“Holding Period” means the period commencing on and from the Restructuring Effective

Date and ending on the date falling six (6) months after the Final Distribution Date.

“HS Claim” means any Claim(s) of HyfluxShop Holdings Ltd or a Subsidiary of HyfluxShop

Holdings Ltd that is not an Excluded Claim.

“HS Claimant” means any person that holds a HS Claim.

“Hydrochem” means Hydrochem (S) Pte. Ltd.

“Hydrochem Scheme” means the scheme of arrangement proposed by Hydrochem under

Section 210 of the Act in its present form or with or subject to any modifications, additions or

conditions approved or imposed by the Court or approved in accordance with its terms.

“Hyflux” means Hyflux Ltd, a company incorporated in Singapore with registration number

200002722Z, whose registered office is located at 80 Bendemeer Road, Hyflux Innovation

Centre, Singapore 339949.

“Hyflux Scheme” means the scheme of arrangement proposed by Hyflux under Section 210

of the Act in its present form or with or subject to any modifications, additions or conditions


“Independent Assessor” means an independent assessor appointed in accordance with the

Proof Regulations.

“Intercompany Claim” means the aggregate value of any Claim(s) of Hyflux or a Subsidiary

of Hyflux that is not an Excluded Claim.

“Intercompany Claimant” means any person that holds an Intercompany Claim.

“Intercompany Claims Cash Consideration” means cash of an amount equal to the total

sum of all Intercompany Claim Cash Payouts.

“Investor” means SM Investments Pte Ltd.

“Liability” or “Liabilities” means any debt, liability or obligation whether it is fixed or

undetermined, whether incurred solely or jointly or as principal or surety or in any other

capacity, whether or not it involves the payment of money or performance of an act or

obligation and whether it arises at common law, in equity or by statute, in Singapore or any

other jurisdiction, or in any manner whatsoever. For the avoidance of doubt, Liability includes

any debt, liability or obligation that is present, future, prospective, actual or contingent.

“Loan Agreement” means the shareholder’s loan agreement dated 18 October 2018 entered

into between: (i) Hyflux, as borrower; and (ii) the Investor, as lender, and which is set out at

Appendix C of the Explanatory Statement.

“Long-Stop Date” means the Long-Stop Date (as defined in the Restructuring Agreement) or

such later date agreed between Hyflux Ltd. and the Investor.

“Other Claim” means the aggregate value of any Claim(s) other than an Excluded Claim, a

General Trade Claim or an Intercompany Claim.

“Other Claimant” means any person that holds an Other Claim.

“Proof of Claim” means a proof setting out the claim of a Scheme Party substantially in the

form set out at Schedule 3 of the Scheme and Appendix D of the Explanatory Statement.

“Proof Regulations” means the Companies (Proofs of Debt in Schemes of Arrangement)

Regulation 2017 (No S 245) of Singapore.

“Record Date” means 5:00 pm on 1 March 2019, being the latest time a Proof of Claim must

be submitted to the Chairman to be assessed for the purposes of voting on the Scheme and

determining the entitlements of the Scheme Parties to Scheme Consideration.

“Restructuring” means the financial and corporate restructuring of the Group in accordance

with and as implemented through the 211B Proceedings, the Hyflux Scheme, the Hydrochem

Scheme, the HMM Scheme, the Scheme and the Restructuring Documents.

“Restructuring Agreement” means the restructuring agreement dated 18 October 2018

entered into between: (i) Hyflux Ltd., as the target company; and (ii) the Investor, as the

investor, and which is set out at Appendix B of the Explanatory Statement.

“Restructuring Documents” means the Restructuring Agreement and the Loan Agreement.

“Restructuring Effective Date” means the later of: (1) the date on which all of the Conditions

Precedent (other than Clause 5.1(d) of the Restructuring Agreement) are fulfilled or waived;

and (2) the Scheme Effective Date.

“Scheme” means the scheme of arrangement proposed by the Company under Section 210

of the Act in its present form or with or subject to any modifications, additions or conditions


“Scheme Claims” means the General Claims and the Intercompany Claims.

“Scheme Consideration” means, in respect of:

(a) the Accepted General Trade Claims: the General Claims Cash Payout; and

(b) the Accepted Subordinated Claims: the Subordinated Claims Cash Consideration.

“Scheme Effective Date” means the date on which the Court order sanctioning the Scheme

under the Act is lodged with ACRA.

“Scheme Manager” means the person appointed from time to time by the Court to administer

the Scheme, which may include Ms Angela Ee of Ernst & Young Solutions LLP.

“Scheme Meetings” means the meetings convened pursuant to an order of the Court (and

any meetings called following an adjournment) at which the Scheme will be considered and

voted upon by the Scheme Parties and any adjournment thereof.

“Scheme Parties” means the General Claimants and the Intercompany Claimants.

“Settlement Date” means the date falling on or before twenty eight (28) days after the

Completion Date (as defined in the Restructuring Agreement).

“Singapore” means the Republic of Singapore.

“Subordinated Claim” means any Intercompany Claim and any HS Claim.

“Subordinated Claimant” means any person that holds a Subordinated Claim.

“Subordinated Claims Cash Consideration” means cash of an amount equal to the total

sum of all Subordinated Claim Cash Payouts.

“Subordinated Claim Cash Payout” means in respect of each Accepted Subordinated

Claim, a cash payout of S$1.

“Subsidiary” means a subsidiary within the meaning of Section 5 of the Act

1.1 In this Explanatory Statement, unless the context otherwise requires or as otherwise

expressly stated:

1.1.1 references to Clauses and Schedules are references to clauses and schedules of

this Explanatory Statement;

1.1.2 references to a person include a reference to an individual, firm, partnership,

company, corporation, unincorporated body of persons or any state or state agency;

1.1.3 references to a statute, statutory provision or regulatory rule or guidance include

references to the same as subsequently modified, amended or re-enacted from time

to time;

1.1.4 references to an agreement, deed or document shall be deemed also to refer to

such agreement, deed or document as amended, supplemented, restated, verified,

replaced and/or novated (in whole or in part) from time to time and to any agreement,

deed or document executed pursuant thereto, provided that such amendment,

supplement, restatement, verification, replacement and/or novation has, to the

extent it relates to a Restructuring Document, been made in accordance with the

terms of such Restructuring Document;

1.1.5 the singular includes the plural and vice versa and words importing one gender shall

include all genders;

1.1.6 references to “including” shall be construed as references to “including without

limitation” and “include”, “includes” and “included” shall be construed accordingly;

1.1.7 headings to Clauses and Schedules are for ease of reference only and shall not

affect the interpretation of this Explanatory Statement;

1.1.8 references to a period of days shall include Saturdays, Sundays and public holidays

and where the date which is the final day of a period of days is not a Business Day,

that date will be adjusted so that it is the first following day which is a Business Day;

1.1.9 references to “dollar” or to “S$” are references to the lawful currency from time to

time of Singapore;

1.1.10 references to time shall be to Singapore time; and

1.1.11 where any amount is specified in this Explanatory Statement (including in any

definition) in respect of any Scheme Consideration, that amount is subject to

rounding in accordance with the terms of the Scheme.

Appendix B – Restructuring Agreement

Appendix C – Loan Agreement

Execution Copy

DATED THIS DAY OF 2018

Between

SM INVESTMENTS PTE. LTD.

as Lender

and

HYFLUX LTD

as Borrower

SHAREHOLDER’S LOAN AGREEMENT

WONGPARTNERSHIP LLP

12 Marina Boulevard Level 28

Marina Bay Financial Centre Tower 3

Singapore 018982

Tel: +65 6416 8000

Fax: +65 6532 5711 /+ 65 6532 5722

Email: [email protected]

Website: http://www.wongpartnership.com

18TH OCTOBER

TABLE OF CONTENTS

CLAUSE HEADING PAGE

1. DEFINITIONS AND INTERPRETATION ...................................................................... 1

2. THE LOAN .................................................................................................................... 2

3. REPAYMENT AND PAYMENT OF INTEREST ............................................................ 4

4. PAYMENTS .................................................................................................................. 4

5. REPRESENTATIONS ................................................................................................... 5

6. UNDERTAKINGS .......................................................................................................... 5

7. ACCELERATION .......................................................................................................... 6

8. COSTS .......................................................................................................................... 7

9. ASSIGNMENTS AND SUCCESSORS ......................................................................... 7

10. REMEDIES AND WAIVERS ......................................................................................... 7

11. VARIATIONS ................................................................................................................ 7

12. PARTIAL INVALIDITY................................................................................................... 7

13. CONFIDENTIALITY AND ANNOUNCEMENTS ........................................................... 7

14. ILLEGALITY .................................................................................................................. 8

15. FURTHER ASSURANCE AND WAIVER...................................................................... 8

16. SET-OFF ....................................................................................................................... 8

17. COMMUNICATIONS..................................................................................................... 8

18. COUNTERPARTS ........................................................................................................ 8

19. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT .................................................... 8

20. GOVERNING LAW ....................................................................................................... 9

THIS SHAREHOLDER’S LOAN AGREEMENT is made on 2018

BETWEEN:

(1) SM INVESTMENTS PTE. LTD., (Company Registration No. 201835450K), a company

incorporated in Singapore and having its registered address at 1 Scotts Road, #25-08 Shaw

Centre, Singapore 228208, as lender (the "Lender"); and

(2) HYFLUX LTD, (Company Registration No. 200002722Z), a company incorporated in

Singapore and having its registered office at 80 Bendemeer Road, Hyflux Innovation Centre,

Singapore 339949 (the "Borrower"),

(collectively, the "Parties" and each, a "Party").

IT IS AGREED as follows:

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

In this Agreement:

"Applicable Laws" means, with respect to any person, any and all applicable treaties,

legislation, laws, regulations, codes, rules including without limitation, the listing manual of the

SGX-ST and the Code or rulings, orders, or any form of decisions issued by, or requirements

of, governmental, statutory, regulatory, supervisory bodies (including without limitation, any

relevant stock exchange or securities council) or any court or tribunal with competent

jurisdiction, whether in Singapore or elsewhere, as amended or modified from time to time, and

to which such person is subject.

"Business Day" means a day (excluding Saturdays, Sundays and gazetted public holidays) on

which commercial banks are open for business in Singapore.

"Code" means the Singapore Code on Take-overs and Mergers.

“Completion” has the meaning ascribed to it in the Restructuring Agreement.

“Completion Date” has the meaning ascribed to it in the Restructuring Agreement.

"Confidential Information" means any information which is proprietary and confidential to a

Party including but not limited to the terms and conditions of this Agreement, information

concerning or relating in any way whatsoever to the organisation, business, finances,

transactions or affairs of either Party, dealings of either Party, secret or confidential information

which relates to a Party's business or any of its principals', clients' or customers' transactions

or affairs, any Party's technology, designs, documentation, manuals, budgets, financial

statements or information, accounts, dealers' lists, customer lists, marketing studies, drawings,

notes, memoranda and the information contained therein, or services and information and

material which is either marked confidential or is by its nature intended to be exclusively for the

knowledge of the recipient alone.

"Definitive Agreements" means this Agreement, the Restructuring Agreement and any other

document designated as such by mutual agreement of the Lender and the Borrower.

“Event of Default” means any event or circumstance set out in Clause 7.1 (Acceleration).

18 October

"Loan" has the meaning attributed to it in Clause 2.1 (Principal).

"Restructuring Agreement" means the restructuring agreement relating to the debt and equity

of the Borrower dated on or about the date hereof between the Parties.

"SGX-ST" means the Singapore Exchange Securities Trading Limited.

“Scheme of Arrangement” has the meaning ascribed to it in the Restructuring Agreement.

"Tax" means any tax, levy, impost, duty or other charge or withholding of a similar nature

(including any penalty or interest payable in connection with any failure to pay or any delay in

paying any of the same).

1.2 Construction

(a) Unless a contrary indication appears, any reference in this Agreement to:

(i) the "Borrower", the "Lender", or any "Party" shall be construed so as to

include its successors in title, permitted assigns and permitted transferees;

(ii) a "person" includes any person, firm, company, corporation, government,

state or agency of a state or any association, trust or partnership (whether or

not having separate legal personality), or two or more of the foregoing;

(iii) a provision of law is a reference to that provision as amended or re-enacted;

and

(iv) a time of day and dates are references to Singapore time unless otherwise

stated.

(b) The headings in this Agreement are for ease of reference only and shall be ignored in

construing this Agreement. References to "Clause" are to be construed as references

to the clauses of this Agreement.

(c) Words importing the singular shall, where applicable, include the plural and vice versa

and words importing the masculine gender shall, where applicable, include the feminine

and neuter genders.

(d) As both Parties have participated in the drafting of this Agreement, the Parties agree

that any Applicable Law or rule requiring the construction of this Agreement or any

provision hereof against the Party drafting this Agreement shall not apply.

2. THE LOAN

2.1 Principal

The Lender agrees to grant to the Borrower, upon the terms and conditions hereof, a loan of

the aggregate principal amount of S$130,000,000 (the "Loan").

2.2 Advance

The Lender shall disburse the entire amount of the proceeds of the Loan to the Borrower's

account or by any means notified by the Borrower on the Completion Date and at any time

thereafter.

2.3 Conditions Precedent

The Lender will only be obliged to comply with Clause 2.2 (Advance) if:

(a) the Restructuring Agreement is in full force and effect and the conditions set out in

Clause 5 (Conditions) of the Restructuring Agreement have been fulfilled or waived in

accordance with the terms of the Restructuring Agreement;

(b) Completion has occurred, or the Lender, acting reasonably, is satisfied that the

disbursements of the proceeds of the Loan will occur at the same time as Completion;

(c) all the representations and warranties as set out in Clause 5.1 (Borrower’s

Representations) are true in all material respects; and

(d) the following conditions precedent have been delivered:

(i) a copy of the constitutional documents of the Borrower;

(ii) a copy of the board resolutions of the Borrower (certified by a director or a duly

authorised officer of the Borrower) approving the terms of, and the transactions

contemplated by this Agreement and ratifying the entry by the Borrower into

this Agreement; and

(iii) to the extent required by Applicable Law, the approval of the shareholders of

the Borrower obtained at a general meeting of the Company, of the terms of,

and the transactions contemplated by this Agreement and ratifying the entry

by the Borrower into this Agreement.

The Lender may waive any or all of the above conditions precedent.

2.4 Purpose and Use

The Parties agree that the Loan shall be applied by the Borrower towards meeting the working

capital needs of the business of the Borrower and its subsidiaries.

2.5 Interest and Default Interest

(a) Interest on the Loan shall accrue from the Borrower to the Lender at the rate which is

4.5% per annum calculated on the principal amount of the Loan outstanding from time

to time.

(b) All interest payable under this Agreement shall accrue from day to day on the total

amount of the Loan outstanding and shall be calculated on the basis of the actual

number of days elapsed and over a 365-day year.

(c) If the Borrower fails to make any payment under this Agreement on the due date for

such payment, interest on the unpaid amount shall accrue daily, from the date of non-

payment to the date of actual payment (both before and after judgment), at 2.0% above

the rate specified in Clause 2.5(a) above.

2.6 Interest Period and Payment

The Borrower shall pay interest accrued on the Loan on the date when repayment of the

principal of the Loan is due hereunder. All interest unpaid shall at the end of each Interest

Period, be compounded by being added to the principal of the Loan then outstanding and shall

bear interest accordingly. For the purposes hereof, “Interest Period” means, subject to the

provisions of this Clause 2.6, each period of three (3) months but:

(a) the first Interest Period shall commence on the date of the first borrowing of the Loan

and shall end on last day of the Borrower’s financial quarter in which the borrowing is

made; and

(b) the first Interest Period relating to any part of the Loan other than the first borrowing

thereof shall commence on the date of its borrowing, and all other Interest Periods shall

commence on the last day of the preceding Interest Period (without double counting),

and in each case, the Interest Periods shall end on the last day of the then current

Interest Period relating to the first borrowing of the Loan so that all Interest Periods

shall be consolidated at all times.

2.7 Security

The Loan shall be unsecured.

3. REPAYMENT AND PAYMENT OF INTEREST

3.1 Repayment Date

The Borrower shall repay the Loan in full and all outstanding interest on it and all other sums

outstanding under or in connection with this Agreement on the date which is three (3) years

after the date of the first drawdown of the Loan.

3.2 Prepayment

The Borrower may, if it gives the Lender not less than three (3) Business Days' (or such shorter

period as the Lender may agree) prior notice, prepay, without any prepayment fee, penalty or

break costs, the whole or any part of the Loan. All prepayment shall be accompanied by

payment of the interest accrued thereon.

3.3 No Reborrowing

No amount repaid or prepaid may be reborrowed.

4. PAYMENTS

4.1 All payments to be made hereunder shall be made in Singapore Dollars and in immediately

available funds.

4.2 All payments to be made by the Borrower hereunder shall be paid without any set-off or

counterclaim and free of any restriction or condition.

4.3 All payments to be made by the Borrower hereunder shall be made to such bank account of

the Lender in Singapore as the Lender may from time to time designate for such purpose.

4.4 All payments to be made by the Borrower to the Lender shall be made free and clear of and

without deduction for or on account of Tax unless the Borrower is required to make such a

payment subject to the deduction or withholding of Tax.

5. REPRESENTATIONS

5.1 Borrower’s Representations

The Borrower hereby represents and warrants to the Lender that:

(a) it is a company duly incorporated and validly existing under the laws of Singapore;

(b) the execution and delivery of, and the performance by it of its obligations under this

Agreement shall not:

(i) conflict with or result in a breach of its constitution; or

(ii) result in a breach of any Applicable Laws by which it is bound; and

(c) it has full power and authority to execute and deliver this Agreement and the

agreements contemplated herein, and to consummate the transactions contemplated

hereby and thereby and that this Agreement and all such other agreements constitute

its valid and legally binding obligations, enforceable against it in accordance with their

respective terms.

5.2 Lender’s Representations

The Lender hereby represents and warrants to the Borrower that:

(a) it is a company duly incorporated and validly existing under the laws of Singapore;

(b) the execution and delivery of, and the performance by it of its obligations under this

Agreement shall not:

(i) conflict with or result in a breach of its constitution; or

(ii) result in a breach of any Applicable Laws by which it is bound;

(c) it has full power and authority to execute and deliver this Agreement and the

agreements contemplated herein, and to consummate the transactions contemplated

hereby and thereby and that this Agreement and all such other agreements constitute

its valid and legally binding obligations, enforceable against it in accordance with their

respective terms; and

(d) it has sufficient financial resources to grant the Loan.

6. UNDERTAKINGS

6.1 The Borrower shall obtain, comply with and do all that is necessary to maintain in full force and

effect any authorisation required under any law or regulation of its jurisdiction of incorporation

to enable it to perform its obligations under this Agreement and to ensure the legality, validity

and enforceability in its jurisdiction of incorporation of this Agreement.

6.2 The Borrower shall ensure that its respective obligations and liabilities hereunder rank and will

rank at all times in right of payment at least pari passu with all its other unsecured debts now

outstanding, except for obligations mandatorily preferred by law.

6.3 The undertakings in this Clause 6 remain in force from the date of this Agreement for so long

as any amount is outstanding under this Agreement.

7. ACCELERATION

7.1 Each of the events set out in this Clause 7.1 is an Event of Default, namely:

(a) An event or circumstance occurs which gives the Lender the right to terminate the

Restructuring Agreement under Clause 13 (Termination) of the Restructuring

Agreement;

(b) Any order is granted by a court in Singapore for or in relation to:

(i) the suspension of payments, a moratorium of any indebtedness, winding-up,

dissolution, judicial management, administration, provisional supervision or

reorganisation (by way of voluntary arrangement, scheme of arrangement or

otherwise) of the Borrower; or

(ii) the appointment of a liquidator or judicial manager in respect of the Borrower.

(c) The Borrower fails to pay any sum payable under this Agreement within five (5)

Business Days of its due date;

(d) Save for any indebtedness prevailing as at the date of this Agreement, the Borrower or

any material subsidiary or material related entity of the Borrower, fails to pay any sum

payable under any of its other finance documents;

(e) The Borrower fails to observe or perform any obligation (other than a payment

obligation) under this Agreement or any other Definitive Agreement, and such breach

entitles the Lender to terminate such agreement;

(f) It is or becomes unlawful for the Borrower to perform or comply with any or all of its

payment or other material obligations under this Agreement or any of its payment or

other material obligations are not or cease to be legal, valid, binding and enforceable;

(g) The Borrower rescinds or purports to rescind or repudiates or purports to repudiate this

Agreement or evidences an intention to rescind or repudiate this Agreement; or

(h) Any event or circumstance occurs in any jurisdiction analogous to any of the events

above in respect of the Borrower.

7.2 On and at any time after the occurrence of an Event of Default, the Lender may:

(a) cancel the Loan whereupon it shall immediately be cancelled;

(b) declare that all or part of the Loan, together with accrued interest, and all other amounts

accrued or outstanding under this Agreement be immediately due and payable,

whereupon they shall become immediately due and payable by the Borrower;

(c) declare that all or part of the Loan be payable on demand, whereupon they shall

immediately become payable on demand by the Lender; and/or

(d) exercise any or all of its rights, remedies, powers or discretions under this Agreement.

8. COSTS

Each of the Parties shall bear its own costs and expenses in relation to the negotiation,

preparation, execution, performance and enforcement of this Agreement and all ancillary

documents to the loan hereby agreed to be lent.

9. ASSIGNMENTS AND SUCCESSORS

No Party shall assign, transfer, create any encumbrance or otherwise deal with its rights or

interests under this Agreement without the prior written consent of the other Party.

10. REMEDIES AND WAIVERS

10.1 So far as is permitted by law and except in the case of fraud, each of the Parties agrees and

acknowledges that its only right and remedy in relation to any representation, warranty or

undertaking made or given in connection with this Agreement shall be for breach of the terms

of this Agreement (including any common law and equitable remedies) to the exclusion of all

other rights and remedies (including those in tort or arising under statute).

10.2 Any release, waiver or compromise of any obligation or term under this Agreement shall be in

writing and shall not be deemed to be a release, waiver or compromise of similar or any other

obligations or terms in the future.

10.3 No failure on the part of any Party to exercise, and no delay on its part in exercising, any right

or remedy under this Agreement will operate as a release or waiver, and any single or partial

exercise of any right or remedy shall not preclude any other or further exercise thereof or the

exercise of any other right or remedy.

11. VARIATIONS

11.1 No variation of this Agreement (or of any of the documents referred to in this Agreement) shall

be valid unless it is in writing and signed by or on behalf of each Party.

11.2 Unless expressly agreed, a variation shall not constitute a general waiver of any provisions of

this Agreement, nor shall it affect any rights, obligations or liabilities under or pursuant to this

Agreement which have already accrued up to the date of such variation.

12. PARTIAL INVALIDITY

If at any time, any provision of this Agreement is or becomes illegal, invalid or unenforceable in

any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the

remaining provisions of this Agreement nor of such provisions under the law of any other

jurisdiction shall in any way be affected or impaired thereby.

13. CONFIDENTIALITY AND ANNOUNCEMENTS

Clause 14 (Confidentiality and Announcements) of the Restructuring Agreement shall apply to

this Agreement as if set out in full herein with references to:

(a) “this Agreement” being construed as references to this Agreement;

(b) “Applicable Laws” and “Confidential Information” being as defined herein; and

(c) “this Clause 14” being construed as a reference to this Clause 13.

14. ILLEGALITY

The illegality, invalidity or unenforceability of any provision of this Agreement under the law of

any jurisdiction shall not affect its legality, validity or enforceability under the law of any other

jurisdiction nor the legality, validity or enforceability of any other provision.

15. FURTHER ASSURANCE AND WAIVER

The Borrower shall, at any time and from time to time, upon the reasonable request of the

Lender, promptly and duly execute and deliver to the Lender for the benefit of the Lender any

and all such further instruments and documents and do all acts and things as the Lender may

(acting reasonably) deem desirable for obtaining the full benefit of this Agreement and of the

rights and powers herein granted.

16. SET-OFF

The Lender may set off any matured obligation due from the Borrower under this Agreement

against any matured obligation owed by the Lender to the Borrower, regardless of the place of

payment or currency of either obligation. If the obligations are in different currencies, the Lender

may convert either obligation at a market rate of exchange in its usual course of business for

the purpose of the set-off.

17. COMMUNICATIONS

Each and every communication under this Agreement shall be in writing in the English language

and delivered in accordance with the terms of the Restructuring Agreement.

18. COUNTERPARTS

This Agreement may be entered into in any number of counterparts, all of which taken together

shall constitute one and the same instrument. Any Party may enter into this Agreement by

executing any such counterpart. Delivery of an executed signature page of a counterpart by fax

or in AdobeTM Portable Document Format (PDF) sent by electronic mail shall take effect as

delivery of an executed counterpart of this Agreement, and if either method is adopted, without

prejudice to the validity of such agreement, each Party shall provide the other with the original

of such page as soon as reasonably practicable thereafter.

19. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT

A person who is not party to this Agreement has no rights under the Contracts (Rights of Third

Parties) Act (Chapter 53B of Singapore) to enforce any term of this Agreement, but this does

not affect any right or remedy of a third party which exists or is available apart from the said

Act.

20. GOVERNING LAW

20.1 This Agreement shall be governed by, and construed in accordance with, the laws of Singapore.

20.2 The Parties agree to submit to the exclusive jurisdiction of the courts of Singapore. The Parties

agree that the courts of Singapore are an appropriate and convenient forum with jurisdiction to

settle any dispute arising out of or in connection with this Agreement, and waive any right to

raise the contrary.

Appendix D – Proof of Claim Forms

1

PROOF OF CLAIM FORM (FOR BANKS AND CONTINGENT CLAIMANTS)

HYFLUX ENGINEERING PTE LTD

(Company Registration No. 200009792D)

(Incorporated in the Republic of Singapore on 18 November 2000)

(the "Company")

For use in connection with the notice published on 1 February 2019 for meeting(s) to be held for

considering and voting on a compromise or arrangement under the Companies Act (Cap. 50)

(“Scheme Meeting(s)”) involving the obligations owed by the Company.

PLEASE REFER TO THE NOTES SET OUT AT THE END OF THIS FORM WHEN COMPLETING

THIS FORM

1. Particulars of party filing proof in relation to Scheme Meeting(s):

Name IC/Passport number /

Company/Business

registration number

Address Contact

number(s)

Email

address:

Reference

number (if

any) #

# Please indicate reference number to be quoted for future correspondence in relation to this matter with

the Company, Chairman of the Scheme Meeting(s) and/or any relevant representative or appointed

person in relation to the Scheme Meeting(s).

2. Particulars of claim(s) against the Company:

S/N Date claim

arose ###

Payment due

date

Brief details of claim(s)## Currency Amount

Claimed

1.

2.

2

3.

4.

Total:

## Please enclose or attach copies of documents substantiating the amounts claimed when filing this form.

The onus is upon the party claiming payment to prove the amounts claimed. Failure to do so may result

in the claim being rejected by the Chairman of the Scheme Meeting(s).

### The amount claimed shall be for all claims against the Company as at 25 March 2019 (including interest).

3. The completed proof of claim (with the relevant supporting documents) can be submitted in

either hard copy or via email to [email protected]. Hard copy proof of claim is to be sent

to: Hyflux Ltd, Hyflux Innovation Centre, 80 Bendemeer Road, Singapore 339949.

4. The deadline for submission of the completed proof of claim (with relevant supporting

documents) is 5.00p.m. on Friday, 1 March 2019.

5. I/We declare that to the best of my knowledge and belief, the Company owes the party set out

in paragraph 1 above the obligations set out in paragraph 2 above.

Dated the day of 2019.

Signature:

……………………………………………......

3

NOTES:

1 A separate form for purpose of instructions on voting will be provided to the parties whose claims are

admitted in relation to the Scheme Meeting(s).

2 Please enclose or attach copies of documents substantiating the obligation claimed when filing this form.

The onus is upon the party claiming to be owed an obligation to prove the obligation claimed. Failure to

substantiate the obligations may result in the claim being rejected by the Chairman of the Scheme

Meeting(s).

3 By submitting this form, you represent, warrant and undertake to the Company and/or the Chairman of

the Scheme Meeting(s) that any personal data of any individual provided has been obtained with such

individual’s consent and hereby consents on behalf of such individual to the collection, processing, use

and disclosure of his/her personal data by the Company and/or the Chairman of the Scheme Meeting(s)

(and any of their respective officers), in each case, in accordance with the provisions of the Singapore

Personal Data Protection Act 2012 (No. 26 of 2012). Any consent given hereunder in relation to personal

data shall survive death, incapacity, bankruptcy or insolvency of any such individual and the holding of

the Scheme Meeting(s). For the purposes hereunder, "personal data" has the meaning ascribed to it in

the Singapore Personal Data Protection Act 2012 (No. 26 of 2012).

4

STAMP

PROOF OF CLAIM

NAME: ______________________________________

Hyflux Ltd


80 Bendemeer Road

Singapore 339949

1

PROOF OF CLAIM FORM (TRADE CREDITORS)

HYFLUX ENGINEERING PTE LTD



(the "Company")

For use in connection with the notice published on 1 February 2019 for meeting(s) to be held for considering and voting on a compromise or arrangement

under the Companies Act (Cap. 50) (“Scheme Meeting(s)”) involving obligations owed by the Company.

PLEASE REFER TO THE NOTES SET OUT AT THE END OF THIS FORM WHEN COMPLETING THIS FORM

1. Particulars of party filing proof:

Name IC/Passport number /

Company/Business

registration number

Address Contact

number(s)

Email

address:

Reference

number (if

required) #

# Please indicate reference number to be quoted for future correspondence in relation to this matter with the Company, Chairman of the Scheme Meeting(s) and/or

any relevant representative or appointed person in relation to the Scheme Meeting(s).

2

2. Particulars of claim(s) against the Company:

S/N Date claim arose

(eg, date services

were contracted,

date work was

done, date goods

were delivered etc)

###

Payment due date

(eg, date of invoice)

Brief details of claim(s)## Project in respect of which

the claim is made

Amount claimed

1.

2.

3.

3

4.

Total:

## Please enclose or attach copies of documents substantiating the amounts claimed when filing this form. The onus is upon the party claiming payment to prove

the amounts claimed. Failure to do so may result in the claim being rejected by the Chairman of the Scheme Meeting(s).

### Only claims arising prior to 22 May 2018 (regardless of invoice date or when payment is claimed) are to be listed in this proof of claim (“Pre-Moratorium Claims”).

The amount(s) asserted in respect of the Pre-Moratorium Claims (including interest) should be calculated up to the cut-off date of 25 March 2019.

3. The completed proof of claim (with the relevant supporting documents) can be submitted in either hard copy or via email to [email protected].

Hard copy proof of claim is to be sent to: Hyflux Ltd, Hyflux Innovation Centre, 80 Bendemeer Road, Singapore 339949.

4. The deadline for submission of the completed proof of claim (with relevant supporting documents) is 5.00p.m. on Friday, 1 March 2019.

5. I/We declare that to the best of my knowledge and belief, the Company owes the party set out in paragraph 1 above the amounts set out in paragraph

2 above.

Dated the day of 2019.

Signature

……………………………………………......

4

NOTES:

1 A separate form for purpose of instructions on voting will be provided to the parties whose claims are admitted in relation to the Scheme Meeting(s).

2 By submitting this form, you represent, warrant and undertake to the Company and/or the Chairman of the Scheme Meeting(s) that any personal data of any individual

provided has been obtained with such individual’s consent and hereby consents on behalf of such individual to the collection, processing, use and disclosure of his/her

personal data by the Company and/or the Chairman of the Scheme Meeting(s) (and any of their respective officers), in each case, in accordance with the provisions of

the Singapore Personal Data Protection Act 2012 (No. 26 of 2012). Any consent given hereunder in relation to personal data shall survive death, incapacity, bankruptcy

or insolvency of any such individual and the holding of the Scheme Meeting(s). For the purposes hereunder, "personal data" has the meaning ascribed to it in the

Singapore Personal Data Protection Act 2012 (No. 26 of 2012).

5

STAMP

PROOF OF CLAIM

NAME: ______________________________________

Hyflux Ltd


80 Bendemeer Road

Singapore 339949

Appendix E – Proxy Forms

HYFLUX ENGINEERING PTE. LTD.



(the "Company")

PROXY FORM FOR SCHEME MEETING

TO BE USED ONLY BY TRADE CREDITORS

Note: Please refer to the Company's notice of a scheme meeting ("Scheme Meeting") of the trade

creditors of the Company to be held at Hyflux Innovation Centre, 80 Bendemeer Road, Singapore

339949 (or such other place as may be notified by announcement on SGXNet) on 8 April 2019 at

2.00p.m. and at any adjournment thereof, for the purpose of considering and, if thought fit, approving

(with or without modification) the scheme of arrangement (the "Scheme") referred to in the said notice

convening the Scheme Meeting.

(This form is to be completed only by a trade creditor of the Company. See Note 1 below.)

Capitalised terms used herein but not defined shall have the meanings given to them in the Notice of

Scheme Meeting dated 22 February 2019.

DETAILS OF TRADE CREDITORS

We, the undersigned, being a trade creditor of the Company in relation to

_________________________________________________________________________________

[describe relevant contract(s), project, services, work done etc.] dated

______________________________ [date of contract, date work or services performed, date goods

were delivered etc], hereby appoint the following as our proxy (the “Proxy”) to attend the Scheme

Meeting or any adjournment thereof:

(See Note 2)

DETAILS OF PROXY

(Note: You can appoint only one proxy. If you leave this section blank, the Chairman of the Scheme

Meeting will act as your proxy)

Name Address NRIC / Passport No. ^

or failing *him/her, the Chairman of the Scheme Meeting ("Chairman"), as our proxy to attend and to

vote for us on our behalf at the Scheme Meeting, and at such Scheme Meeting (or at any adjournment

thereof) to vote for us and in our name(s) as indicated below, and if no such indication is given, as our

proxy thinks fit.

^ The Proxy is to present his/her passport (if he/she is not a Singapore citizen) or Singapore National

Registration Identity Card (if he/she is a Singapore citizen or a Singapore permanent resident holding a

blue Singapore National Registration Identity Card) immediately prior to the Scheme Meeting to gain entry

to the Scheme Meeting

We acknowledge that the appointment of such Proxy is (subject to Notes 3 and 9 below) neither

revocable nor subject to amendments after 2.00p.m. (Singapore time) on 5 April 2019, which is the

Expiration Time (as defined in Note 6 below).

2

VOTE

The Proxy is authorised only to vote on our behalf in favour of (“FOR”) or against (“AGAINST”) the

Scheme as hereunder indicated (by a √ mark).

Note: If you leave both boxes blank, your proxy will have complete discretion as to how to vote on your

behalf and such vote, once cast by your proxy, will be binding on you. Where your proxy is the Chairman

and you leave both boxes blank, such vote will be cast FOR the Scheme (for the avoidance of doubt, if

the Chairman is your proxy and you have voted AGAINST the Scheme, such vote will be cast AGAINST

the Scheme). DO NOT TICK IN BOTH BOXES AS THIS WILL INVALIDATE YOUR VOTE.

FOR (Please indicate with a tick ()) OR AGAINST (Please indicate with a tick ())

Dated this day of ___________ day of ______________2019

______________________________________

Signature(s) or Common Seal

Important: Please read notes overleaf carefully before completing this form.

3

Notes to Proxy Form:

1 This form is to be completed only by a trade creditor of the Company. A trade creditor includes any person

or corporation that has supplied services and/or goods to the Company.

2 A trade creditor may only appoint a natural person or the Chairman as a proxy, and may only appoint one

such person or the Chairman as a proxy.

3 The appointment of a proxy does not preclude the trade creditor from attending and voting at the Scheme

Meeting. If a trade creditor attends the Scheme Meeting in person, its proxy appointment shall be deemed

to be revoked, and the Chairman reserves the right to refuse to admit such proxy to the Scheme Meeting.

4 A trade creditor may authorise by resolution of its directors or other governing body such person as it

thinks fit to act as its representative in accordance with its constitutional documents or may under its

constitutional documents grant a power of attorney to such person as it thinks fit powers to act as its

representative or may have in force a standing authorisation under a pre-existing power of attorney.

Attendance by any such representative will be considered as attendance by the trade creditor in person.

5 Any alteration made in this Proxy Form must be initialled by each signatory of the appointor who executes

this Proxy Form.

6 This Proxy Form (together with the power of attorney or board resolution (or a certified copy thereof), if

any, under which it is signed), must be deposited at the office of the Company’s meeting agent, Boardroom

Corporate & Advisory Services Pte. Ltd. (the "Meeting Agent"), at 50 Raffles Place #32-01 Singapore

Land Tower, Singapore 048623, not less than 72 hours before the time appointed for holding the Scheme

Meeting (the “Expiration Time”).

7 This Proxy Form must be executed under the hand of the appointor or his attorney duly authorised in

writing or, where the Proxy Form is executed by a corporation, it must be executed either under its seal

or under the hand of an officer or attorney duly authorised. Any alteration made to the Proxy Form should

be initialled by each signatory of the person who signs this Proxy Form.

8 The Chairman shall be entitled to reject this Proxy Form if it is incomplete, improperly completed,

unexecuted or improperly executed, illegible, or where in the Chairman’s opinion the true intentions of the

appointor are not ascertainable from the instructions of the appointor specified in this Proxy Form, or if

this Proxy Form is not received by the Meeting Agent prior to the Expiration Time.

9 A trade creditor who has already submitted a Proxy Form to the Meeting Agent may only subsequently

revoke (subject to the revocation of proxy set out in Note 3 above) or amend such Proxy Form by

submitting a new Proxy Form to the Meeting Agent not later than the Expiration Time. In that case, the

Meeting Agent shall disregard the previous Proxy Form(s) and refer only to the last Proxy Form received.

10 Trade creditors who submit this Proxy Form represent, warrant and undertake to the Company, the

Meeting Agent and the Chairman that any personal data of any individual provided has been obtained

with such individual’s consent and hereby consents on behalf of such individual to the collection,

processing, use and disclosure of his/her personal data by the Company, the Chairman or the Meeting

Agent (and any of their respective officers, employees or advisers), in each case, in accordance with the

terms of the Scheme and the provisions of the Singapore Personal Data Protection Act 2012 (No. 26 of

2012). Any consent given hereunder in relation to personal data shall survive death, incapacity,

bankruptcy or insolvency of any such individual and the termination or expiration of the Scheme. For the

purposes hereunder, "personal data" has the meaning ascribed to it in the Singapore Personal Data

Protection Act 2012 (No. 26 of 2012).

Appendix F – MHI Settlement Agreement

lN WITNESS WHEREOF this Agreement has been entered into by the Parties on the date first writtenabove.

Signed for and on behalf of

MITSUBISHI HEAVY INDUSTRIES, LTD.Name: [Ct^ þ^-qiDesignation:

U {aæ

41uqSigned for and on behalf of I

MITSUBISHI HEAVY INDUSTR¡ES ASIA PACIFIC PTE. LTD.

Witnessed by

Name:Designation

Name:Designation:

Witnessed by

Name:Designation:

lÞ1. W€À 4'\\r¡at c-nntul

z

â

lo sL;,^o |c¡i..r- r.

L.t t tçi lJe"-,

þJd ú.-^ r¿,t

SIGNATURE PAGE TO SETTLEMENT AGREEMENTBETWEEN MHI, HYFLUX, HYDROCHEM, HEPL, TUASONE AND TEE

-18-

l-


MITSUBISHIHEAVY INDUSTRIES ENVIRONMENTAL & CHEMICAL ENGINEERING CO., LTD.

Name: tl i^,'t'- i Y. m\ aao{oDesignation:

J-+- 4 ^l

Witnessed by

Name:Designation:

á

çh t'¿¿i ly'¿n

çr5a\ t.,v6r 4/


HYFLUX LTD.

Name:Designation

Witnessed by

Name:Designation

SIGNATURE PAGE TO SETTLEMENT AGREEMENTBETWEEN MHI, HYFLUX, HYDROCHEM, HEPL, TUASONE AND TEE

-19-

l.

Appendix G – Overview of Schemes

1 On the assumption that 60% of Hyflux’s shareholding is valued at S$400 million. 2 Restructuring Effective Date, which will likely take place on16 April 2019 or shortly thereafter. 3 Inclusive of loan by KfW IPEX GmbH of S$144 million (approx.) to Hydrochem which is guaranteed by Hyflux and crystallised debt of approximately S$65 million (approx.) from bonds and guarantees that have been called before November 2018. 4 After deducting a 20% cash incentive component (First Contingent Claim Management Payout) to be paid to project teams/employees responsible for extinguishment of contingent claim. 5 Where Contingent Claims become Extinguished, payment of the cash component will be made after deducting a 20% cash incentive component (Second Contingent Claim Management Payout) to be paid to project teams/employees responsible for extinguishment of contingent claim. 6 Minus the sum of all 20% cash incentive components (First Contingent Claim Management Payout and Second Contingent Claim Management Payout) paid out in respect of all Extinguished Contingent Claims. 7 Assuming all the Contingent Claims Crystallise and are paid out. The return per Claimant increases with each Contingent Claim becoming Extinguished instead of becoming Crystallised. 2 years after RED, any Contingent Claims that have not Crystallised or Extinguished will become Expired. 8 S$265 million Principal + S$13 million (approx.) accrued Interest 9 Inclusive of crystallised debt of S$10 million (approx.) from bonds and guarantees that have already been called since November 2018 and minor trade debt of an aggregate sum <S$500k. 10 Inclusive of the S$3.15 million in principal held by directors. 11 Inclusive of the S$1.202 million in principal held by directors. 12 S$1 per Intercompany Claimant. 13 From Hydrochem’s share of the Net Cash Flow from TuasOne EPC Contract upon TuasOne PCOD after making necessary deductions under MHI Settlement Agreement (eg, First Priority Payment to MHI, Trade Creditors’ Payment, cost overruns and LDs) 14 From Trade Creditors’ Payment of S$15m under MHI Settlement Agreement that can only be paid to TuasOne trade creditors. 15 From Hydrochem’s share of the Net Cash Flow from TuasOne EPC Contract upon TuasOne PCOD after making necessary deductions under MHI Settlement Agreement (eg, First Priority Payment to MHI, Trade Creditors’ Payment, cost overruns and LDs) 16 From Trade Creditors’ Payment of S$15m under MHI Settlement Agreement that can only be paid to TuasOne trade creditors.

PARTIES VALUE OF

CLAIMS (APPROX.)

SHARES IN HYFLUX POST-REORGANISATION

(Assumed equity value of S$667

million1)

EQUITY / CASH DISTRIBUTION (APPROX.)

ESTIMATED TOTAL RETURNS (APPROX.)

ESTIMATED PERCENTAGE RETURNS PER

CLAIMANT (APPROX.) 28 days (tentative) after RED2

Assuming TuasOne reaches

PCOD

One (1) year after RED

Two (2) years after RED

Investor – SM Investment Pte Ltd

60% in exchange for S$400m investment

Ordinary Shareholders of Hyflux

4% which includes 1.38% (approx.) existing ordinary shares of directors which

will be given to the P&Ps

HYFLUX SCHEME

Unsecured Scheme Parties

Bank Lenders S$717m3

27%

S$139m + 16.13% equity

Payout to all Unsecured Scheme Parties from escrow

upon Contingent Claims being Extinguished4

Payout to all Unsecured

Scheme Parties of all cash and equity

remaining in escrow5

S$232m6 + S$180m (assumed equity value of

27% equity) ≥24.5%7

MTNs S$278m8

Trade and other claimants

S$11m9

Contingent Claimants S$678m

S$93m + 10.87% equity placed in escrow (payout for

each Contingent Claim distributed upon

Crystallisation less incentive)

Debt Securities Scheme

Parties of Hyflux

Perpetual Capital Securities

S$500m principal10

9% (from Hyflux Scheme)

+

1.38% (approx.) from Hyflux directors’ contribution of their existing ordinary

shares in Hyflux

S$27m + 10.38% equity

S$27m + S$69.2m (assumed equity value of

10.38% equity)

Returns received by directors for their P&P

holdings will be redistributed to other P&Ps

10.69%

increased to 10.74%

(factoring redistribution of directors’ returns) Preference Shares

S$400m principal11

Subordinated Scheme Parties S$72.3m

Nominal12 Nominal ≈ 0%

HYDROCHEM SCHEME

General Trade and Other Claimants S$58.01m S$4.39m

S$2.05m +

(likely between S$3.75m and S$11.26m13)

Minimum return

Assuming TuasOne reaches PCOD

Minimum return

Assuming TuasOne reaches PCOD

S$4.39m S$6.44m to S$17.70m

S$5,000 + ~6.90%

S$5,000 + ~10.47% to 30.02%

TuasOne Trade Claimants S$17.73m S$2.05m S$11.57m S$2.05m S$13.62m14 S$5,000 + ~6.90%

S$5,000 + ~80.91%

Subordinated Scheme Parties S$254.2m Nominal

Nominal ≈ 0%

HMM SCHEME

General Trade and Other Claimants S$19.78 m S$2.52m

S$0.27m +

(likely between S$1.25m and

S$3.7415)

S$2.52m S$2.79m to

S$6.53m S$5,000 + ~9.65%

S$5,000 + ~11.03% to 30.59%

TuasOne Trade Claimants S$1.8m S$0.27m S$1.11m S$0.27m S$1.38m16 S$5,000 + ~9.65%

S$5,000 + ~80.91%

Intercompany Claimants S$205.3m Nominal

Nominal ≈ 0%

HE SCHEME All Claimants S$15.79m S$3.77m S$3.77m S$5,000 + ~21.78%

Subordinated Scheme Parties S$79.8m Nominal Nominal ≈ 0%