Pacific International Lines (PIL) will cut $1bn of its debt by the end of the year as it plans to fully repay all scheme debts and satisfy scheme obligations ahead of schedule.
The Singapore-based liner company said in an announcement on Friday that the $1bn early repayment will be made to creditors who were subject to the scheme of arrangement that the company entered into as part of its restructuring in the first quarter of 2021.
PIL said the repayment will leave it "a well-capitalised company with a solid financial structure and resilience to address and mitigate the cyclical nature of the industry going forward".
Like most of its liner peers, the company said it has benefitted from strengthening freight rates, while at the same time it has also implemented various business, financial and operational initiatives that have enabled it to benefit from the strong container market.
Executive chairman SS Teo said PIL has experienced "the most dramatic turnaround in our financial position" over the past eight months.
"In addition to the market recovery, our strong business fundamentals, ongoing restructuring initiatives and the hard work of our employees have improved our overall position.
"With our healthy cash flow situation, we decided that it was only right that we reciprocate the support shown to us by our creditors and partners, and repay the debts owed to all our scheme creditors, ahead of schedule. We believe that they would benefit from the certainty of having cash returned to them earlier than anticipated," Teo said.
"By satisfying the terms of the scheme fully with the repayment and continued financial prudence, PIL will be able to enjoy a strong standing with financial institutions, customers and suppliers. This will enable PIL to strive ahead to grow a strong business built on a sustainable capital structure."
Creditors of the scheme that PIL will repay by 30 December are the reinstated senior debt creditors — mainly financial institutions who had extended loans to the company — and holders of issued Option A and B securities.
Pursuing growth
Teo said that with PIL now well capitalised, efforts will continue to facilitate growth.
The company's focus will be to continue to maintain a lean portfolio through regular reviews of its fleet size and service.
As part of its reviews over the past year, PIL has strengthened and focused its trade routes in China, Asia, Africa, the Middle East, South America and Oceania.
That company said that as an established player in the Asian and African markets, it is leveraging its strong position to roll out more value-added services.
Over the past months, it has added several direct services "in response to customers’ needs". These include a direct Mozambique service, a South China to India West Coast express service, and a direct China to Middle East Gulf service.
PIL was privately owned by the Teo family until Heliconia Capital Management, a subsidiary of state-owned investment company Temasek, took a majority stake earlier this year. The buy-in reportedly diluted the Teo family's interest in the company to around 15%.
