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Hyflux: $800 million bridge loan.

Wednesday, June 1, 2011

It was not so long ago that Hyflux offered $200 million of perpetual preference shares. At that time, I wondered why Hyflux had to pay a 6% annual dividend yield on those shares.

6% seemed a tad expensive to me in an environment where interest rates are very low. I concluded that Hyflux could be having some difficulty getting long term financing from financial institutions at even an interest rate of 6% per annum.

Now, Hyflux has approached a group of banks for a $800 million bridge loan. Bridge loans are usually short term in nature (i.e. not more than a year) and are usually perceived as lower risk and would attract a lower interest rate.

There is no question that Hyflux is a growth company and one with huge capital expenditure requirements. It could turn out very nicely for shareholders if its business chugs along as planned. Good luck to all shareholders.

Related posts:
Hyflux: 6% perpetual Class A preference shares.
Hyflux director divested all his shares!


so1trg said...

Fishy Business. Borrow money here borrow money there.
Borrow A to pay to B? Ponzi scheme? Stay far far away.

AK71 said...

Hi so1trg,

I don't know if the business is fishy but it is most certainly capital intensive.

Investors must do thorough due diligence and perhaps be extra cautious here. :)

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