A rescue package to assist financially troubled Pacific International Lines (PIL) is attracting interest from Chinese financial investors, according to market sources in Singapore.

Two weeks ago, the Singapore-based liner company announced it had opened negotiations exclusively with Heliconia Capital Management to help it overcome its financial problems. The firm is an offshoot of Singapore state investment firm Temasek Group.

An initial $400m package from Heliconia, which will see it acquire both equity and debt in the cash-strapped PIL, has been widely reported as under negotiation in the Lion City.

However, financial sources suggested that the figure falls well short of the required funding for PIL to find its feet again and that additional partners will be brought in.

In the first half of 2019, PIL reported $1.89bn in loans and $1.97bn in lease liabilities. This included $260m owed to DBS Bank in Singapore and another $140m owned to companies related to Temasek. A further $60m in bonds are due to mature in November.

As a result of its financial problems, PIL has already been forced to cut its charter hire to Japanese shipowners.

Creditors representing about 97% of PIL’s outstanding debt have agreed to call off enforcing closure on the loans as it restructures under talks with Heliconia.

Heliconia’s involvement has already secured PIL’s short-term future to the relief of creditors. The unexpected and sudden bankruptcy of Hanjin Shipping showed that liner companies can collapse quickly if they run into cash-flow problems and debt default.

However, PIL’s controlling Teo family has strong links to China and the emergence of Heliconia as an equity partner is giving Chinese investors the confidence to take a stake in the company.

Singapore financial sources say the attraction of the PIL deal would be to gain a substantial share in a company ranked among the top 10 largest liner firms globally, at a fraction of its asset value, just at the point the market is starting to recover.

PIL once had an asset value of about $5bn.

PIL is not alone in seeking financial help during the pandemic, with lines such as HMM, CMA CGM and others requiring state-backed funds to stay afloat.

Already there have been signs the intra-Asian liner trades hit by the coronavirus pandemic are starting to recover, as countries come out of lockdown.

Investors could see quick and potentially large financial gains if the shipping market and asset values fully recover. Heliconia, and any other partner investors, could sell out profitably once the company’s balance sheet has recovered and the container market demand volumes return.

However, a question mark will hang over the role of the controlling Teo family in the company. But, with his close connections to China, chief executive Siong Seng Teo, is expected to survive the restructuring and continue to lead the company.