Pacific International Lines (PIL) filed an application with Singapore's High Court on Monday seeking a meeting with creditors to consider a proposed scheme of arrangement.
It has also sought a moratorium on legal proceedings against the company.
PIL disclosed that it had formulated a comprehensive restructuring plan with its lenders and Heliconia Capital Management, an arm of Singapore state-backed investment company Temasek Holdings.
“As we have formulated a comprehensive restructuring plan with financial lenders, advisors and Heliconia Capital Management, today’s commencement of a scheme of arrangement process is a significant milestone for PIL in the debt-reprofiling plan to ensure the company’s long-term sustainability and success," said executive chairman and managing director Teo Siong Seng, also known as SS Teo.
"It is a natural progression and will provide our creditors, noteholders, banks and other interested parties the assurance that their interests will be treated in a fair and transparent way.”
The creditors that PIL seeks to include in the proposed scheme of arrangement include noteholders of the $60m fixed-rate bonds issued by the company that are due this year.
PIL is seeking protection for a period up to the date of a court order sanctioning the proposed scheme pursuant to an application, or four months from the date of an order granting the leave application, whichever comes earlier.
The moratorium would, among other things, prohibit the commencement of winding-up proceedings and enforcement proceedings. It would also extend to PIL staff in Singapore and elsewhere.
“The scheme of arrangement also allows PIL to continue to operate smoothly without disruption to our business and paves the way for our new investor to inject fresh finance into the company and provide long-term stability,” Teo explained.
Market challenges
PIL’s liquidity troubles stem from challenges in the liner market that it had been facing for a long time even before the Covid-19 pandemic.
In response, the company began negotiating a debt re-profiling plan with 15 of its main lenders that hold 97.6% of its debt.
Under the plan, debt principal and interest payments will be deferred until 31 December.
At the same time, the company embarked on a large route and fleet rationalisation: it pulled out of the transpacific market and offloaded its 60% stake in South Pacific islands operator Pacific Direct Line.
A concurrent fleet pruning exercise saw chartered-in ships handed back to their owners and directly owned ships sold off.
VesselsValue indicates that PIL has sold 11 containerships this year, ranging from a clutch of feeder-size ships to four nearly new, 11,923-teu panamaxes, together with one supramax bulker.
The company indicated to TradeWinds in September that there would be fewer future vessel sales, as its route and fleet rationalisation had been completed, and no further changes would be made to its service offering, except those made in the ordinary course of business.
It noted that the sales represented a small fraction of its overall owned fleet, which currently stands at just short of 100 containerships, multipurpose vessels and bulkers.
