Involved in the biosynthesis of the enzyme cofactor mycofactocin (MFT) (PubMed:33014324). Catalyzes the oxidative deamination of AHDP (3-amino-5-[(4-hydroxyphenyl)methyl]-4,4-dimethyl-2-pyrrolidin-2-one), forming an alpha-keto amide moiety on the resulting molecule, which is called pre-mycofactocin (PMFT). This reaction occurs via a 5-[(4-hydroxyphenyl)methyl]-3-imino-4,4-dimethylpyrrolidin-2-one intermediate, which converts to PMFT. The alpha-keto amide moiety is the redox-active center for the redox activity of mycofactocin (PubMed:31381312). Is required for the in vivo ethanol assimilation in M.smegmatis (PubMed:31113891). 3-amino-5-[(4-hydroxyphenyl)methyl]-4,4-dimethyl-2-pyrrolidin-2-one + H2O + O2 = H2O2 + NH4(+) + pre-mycofactocin Cells lacking this gene lose the ability to utilize ethanol as the sole growth substrate (PubMed:31113891). They are unable to produce PMFT(H2) and glycosylated (methyl)MFT(H2), and accumulate AHDP and glycosylated AHDP (PubMed:33014324). Belongs to the FMN-dependent alpha-hydroxy acid dehydrogenase family.