The Singaporean carrier has avoided liquidation with a new debt restructuring plan.
Singapore-headquartered Pacific International Lines (PIL) secured its immediate future as creditors of the world’s 23rd largest container liner shipping company have overwhelmingly voted in favour of a debt restructuring plan. If the vote had been lost, PIL will almost certainly have been liquidated.
The approval from the shipping company’s various bondholders and creditors means PIL can move forward with its US$600M bailout deal with Heliconia Capital Management, which is a unit of Singapore’s sovereign wealth fund, Temasek Holdings.
“We are heartened by the results of the votes”, said SS Teo, PIL’s executive chairman and managing director. “This is indeed a strong testament to creditors’ confidence in PIL’s business and future prospects. We wish to thank our Investor, our creditors and our advisors for their steadfast support and belief in PIL, and all our customers and vendors for their patience during this challenging time while we are working on normalising our financial situation.”
He added: “The comprehensive financing package offered by our Investor, in conjunction with a holistic restructuring of PIL’s financial liabilities, will recalibrate PIL’s capital structure for long-term sustainability, thereby allowing PIL to emerge as a stronger, leaner and better capitalised company, and one that will provide creditors with a clear path to recovery going forward.”
PIL will now apply to the High Court of Singapore to seek its approval of the debt restructuring package with hearings expected to take place in late February/early March. It is hoped that the restructuring exercise will be completed before the end of H1 2021.
PIL has experienced mounting financial difficulties for several years with net losses of US$795M and US$254M posted in 2019 and 2018, respectively. Meanwhile, the company’s debt had mushroomed to over US$3.6B. While the Teo family has sold container factories (controlled by Singamas) in China, a liner company subsidiary (Pacific Direct Line) and many ships in an effort to prop-up the carrier, these measures had not worked.