Beleaguered Singaporean liner operator Pacific International Lines confirmed on 26 May 2020 that a unit of the Singapore government’s investment agency, Temasek Holdings, may be extending a lifeline.
In a filing submitted to the Singapore Exchange, PIL said that it has signed an agreement with the Temasek unit, Heliconia Capital Management, promising not to enter into similar discussions with other investors, for six months from 26 May 2020.
Evercore Asia (Singapore) and WongPartnership are offering financial and legal advice, respectively, to PIL.
The privately owned PIL is controlled by the family of the company’s managing director, Teo Siong Seng. The liner operator is also the largest shareholder of container manufacturer Singamas.
PIL also stated in the filing that it has reached an agreement with the majority of its creditors to delay the repayment of principal and interest sums, to 31 December 2020, with the arrears said to comprise 97.6% of the company’s total debt. The company mentioned that it has debts to 15 financial lenders.
PIL disclosed that it remains in talks with two financial institutions that hold the other 2.4% of the company’s debt, and which have yet to consent to an extension of the repayment period. One of these lenders had sent PIL a letter dated 11 May 2020, demanding the repayment of US$12,641,059.38 within 10 business days.
PIL blamed the challenging market conditions in the container shipping industry for its poor business performance, adding that despite its efforts to shore up its finances, the Covid-19 pandemic had compounded the situation.
PIL is understood to have fallen behind on charterhire payments to its tonnage providers, which include Japanese ship owners. In recent months, PIL acted to improve its balance sheet, including exiting the Transpacific trade, selling a subsidiary, Pacific Direct Line, and a number of ships. In April, PIL issued a statement to refute rumours that the company was facing bankruptcy.
Owing to its situation, PIL admitted that the company may default on the principal amount of SG$60 million (US$42.37 million) of bonds that are due later this year.