Pacific International Lines is unable to make good on the principal and interest due to holders of an SG$60 million (US$43.8 million) bond issue that matured on 16 November 2020.
The cash-strapped Singaporean liner operator said in filing to the Singapore Exchange that it is not commercially feasible to pay out the principal and interest, which is 8.5% per annum. The bonds were issued in November 2018.
However, the company said in a statement, "With the support of the investors as well as a significant majority of creditors, PIL is progressing towards the comprehensive debt restructuring plan outlined in our disclosures last week."
Meetings over the last week had brought into question the long-term futuree of the company, which PIL also addressed. "The plan will ensure the long-term operational sustainability for the company and has been communicated in detail to noteholders during an informal meeting held on 11 November 2020. As per the aforementioned disclosures, this plan does include a reprofiling of all the company's debts, including noteholders."
On 11 November PIL’s management told investors the company was working on receiving US$600 million in funds from Heliconia Capital, a unit of the Singapore government’s investment company, Temasek Holdings.
PIL’s management said during that meeting that the company faces liquidation without comprehensive restructuring. In additin, PIL disclosed that its net loss widened to US$795 million due to impairments.
PIL has been in talks with financiers to reprofile its US$3.3 billion debts, as at 31 December 2019, and in the second quarter of 2020, secured a moratorium on principal and interest repayments.
Once the funds from Heliconia are secured, PIL will implement restructuring via a scheme of arrangement under Singapore’s Companies Act. Such a scheme would see the company enter into a compromise or arrangement with creditors, including bond holders, which will bind any non-consenting minority parties.
PIL has applied to Singapore’s High Court to seek protection from its creditors while the funding from Heliconia is negotiated.