Singapore's Pacific International Lines (PIL) is trying to find a solution to overdue bills in a cash flow situation aggravated by the coronavirus outbreak.
Singamas, its container manufacturing subsidiary, revealed in a statement to the Hong Kong stock exchange that it is in talks with its parent and other creditors over a repayment deal.
Singamas blamed "the challenging market conditions" and the global impact of Covid-19 for its parent's troubles.
"The discussion is progressing well with good support from the creditors," it said.
The amount of trade receivables due from PIL to Singamas is $147.42m — a majority of which is overdue, Singamas added.
The outfit said it is trying to reach a "commercially feasible agreement" with PIL.
Partners supportive
A PIL spokeswoman confirmed the "active" talks with Singamas to TradeWinds and said the debt related to containers acquired.
"Amid challenging market conditions and the current global impact of the Covid-19 virus, our business partners and creditors continue to acknowledge and support our ongoing strategies to optimise our resources and boost our network efficiencies," she said.
"They continue to express their confidence in the group, and we remain in constant dialogue with them."
She said the order for containers was entered into under normal trading conditions in a lull period.
PIL has made a loss provision of $10m as a result.
Singamas assessed the impairment and takes the view that PIL is able to raise sufficient funds for repayment, the spokeswoman added.
Big debt burden
"PIL is committed to enter into a commercially feasible agreement with Singamas in relation to the repayment of these trade receivables as soon as reasonably practicable," she said.
"PIL will continue to work closely with all our business partners and creditors to ensure continued service quality whilst rationalising our services in key markets in Asia, the Middle East, Africa, South America and Oceania."
A report by analyst Reorg said a bond offering circular issued by PIL in 2018 revealed it had liabilities of $4.7bn at that time. Of this, $2.3bn was termed as current.
The liner operator also had upcoming unsecured term loans maturities of at least $210m in 2020, according to the same document.
The bond was never issued due to unfavourable market conditions.
Lenders include DBS and the Export-Import Bank of China.
Scrubber programme delayed
Alphaliner said PIL has committed to install scrubbers on 42 of its ships, with just 15 completed so far.
The remaining installations are severely delayed due to congestion at Chinese yards.
The carrier initially expected works to be completed by May 2020.
"Since the price spread between compliant low-sulphur fuel oil and high-sulphur fuel oil has fallen to $80 per tonne in Singapore and just $50 per tonne in Rotterdam, the immediate bunker savings from scrubber-fitted ships have reduced notably — at least for the time being," Alphaliner added.
PIL has sold six neo-panamaxes this year, and signalled more vessel disposals could be carried out.
US-listed shipowner Seaspan Corp has snapped up four of the 12,000-teu units for $367m, while Taiwan's Wan Hai Lines took two for $186.8m.
PIL has already pulled out of the transpacific market, and has offloaded its 60% stake in South Pacific islands operator Pacific Direct Line (PDL), which operates five feeders of between 520 teu and 940 teu.
The company was forced to deny some of its vessels were arrested in Singapore earlier this year, instead blaming a lack of low-sulphur fuel oil for the prolonged anchoring of a number of ships there.
Singamas sold most of its dry container manufacturing factories in China in May 2019 for $565m to Cosco Shipping Financial Holdings.
