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Temasek bailout still under discussion as PIL offloads more ships

Struggling Singaporean liner operator Pacific International Lines (PIL) has said that by the end of September 2020, it expects to complete bailout discussions with a unit of the Singapore government’s investment company Temasek Holdings.

As such, PIL is delaying the release of its 2019 financial results, saying that the figures will be released after the debt re-profiling discussions are more advanced.

PIL has signed an agreement with the Temasek unit, Heliconia Capital Management, which prevents the company from entering into similar discussions with other investors, for six months from 26 May.

For H1 2019, PIL had a narrower net loss of US$65 million, compared with US$141.18 million in H1 2018.

The company had tangible fixed assets of US$4.66 million and cash in hand of US$227.2 million as at 30 June 2019. There were long-term bank loans of US$1.07 billion and finance leases of US$1.26 billion, which against equity of US$1.69 billion, meant that PIL was highly leveraged. PIL also had a working capital deficit, with more than US$1.5 billion of debts due within a year.

The family owned company is controlled by MD, Teo Siong Seng, the family is also majority shareholder in container manufacturer Singamas.

PIL MD, Teo Siong Seng.

Container News has since learnt that PIL has sold two more ships. This month, two 1,550TEU, 1997-built, sister vessels, Kota Wajar and Kota Waris, sold to a Bangladeshi conglomerate, Karnaphuli Limited and renamed Sahare and Sarera, respectively. The sale price was not disclosed but the market and scrap values of each ship are on par, at US$2.3 million. Since 2019, PIL has sold at least eight vessels, excluding ships that were leased back.

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 tradeselling a subsidiary, Pacific Direct Line, and a number of ships.

Container News understands that like many liner operators, Q1 2020 was dismal for PIL as the Covid-19 pandemic spread worldwide, unsettling supply chains and factory production. A PIL source said the company’s ship sales aim to raise cash to consolidate its current liner portfolio.

IMAGE: Teo Siong Seng

Martina Li
Asia Correspondent

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