Pacific International Lines (PIL) has entered into an exclusivity agreement with an arm of Singapore state-backed Temasek Holdings over a potential investment in the financially troubled liner operator.
The announcement of the talks with Temasek's Heliconia Capital Management subsidiary confirmed details of a TradeWinds story last week reporting that an offshoot of Temasek was being lined up as a white knight to save the containership operator.
Six-months of talks
Singapore-headquartered PIL said the exclusivity agreement would run for six months from 26 May.
The potential investment comes as part of a package of financial measures announced by PIL today to address its outstanding liabilities.
The company has won significant respite from debt repayment while negotiations over the investment from Heliconia continue.
PIL said its financial troubles had worsened over recent weeks.
“In the light of significant challenges facing the container shipping industry, PIL has made significant progress toward rationalising out service offerings and reducing asset costs. However, despite the company’s best efforts, the persistent Covid-19 pandemic has caused the situation to worsen over the past month,” PIL said.
The liner operator has agreed a debt re-profiling plan with its 15 main financial lenders. Under the plan, principal and interest payments on debt will be deferred until 31 December 2020. A formal standstill on the enforcement of actions has also been agreed until the same date. The agreement covers 97.6% of PIL's debt.
One lender, not included in the agreement, has demanded in a letter sent on 11 May, that $12.6m of debt be repaid within the next 10 business days.
Further discussions
PIL said it is in discussions with companies outside the main agreement representing the remaining 2.4% of debt.
It is also in discussions with its financial lessors to re-profile lease agreements. According to reports in Japan, PIL has contacted owners of tonnage it operates under lease agreements proposing to pay only 5% of lease hire payments from June until a new agreement can be struck.
PIL warned that there could be further debt default over the coming months including $60m in fixed-rate bonds that are due this year.
