Once again market talk is picking up about a possible sale of Pacific International Lines (PIL), the world’s 10th largest container carrier.
A spokesperson for the Singapore company controlled by the Teo family was forced to deny the line is being put up for sale in the wake of the lead story from Alphaliner’s weekly report suggesting a sale could once again be on the cards.
PIL’s 41% owned subsidiary Singamas announced on Monday the disposal of three of its largest container manufacturing factories in China to Cosco for a total price of RMB3.8bn ($565m).
“The disposal may not be sufficient to forestall the sale of cash-strapped PIL, widely seen as the next most attractive target in the container shipping market amidst the ongoing consolidation trend,” analysts at Alphaliner noted, adding that the company has repeatedly denied that it is planning to sell its shipping operations.
PIL has ceased to publish financial results for the group’s holding company since the end of 2018, even though the privately-owned group had previously released its results in 2017 and the first half of 2018. According to its last publicly available financial figures, PIL recorded a net loss of $141m in the first six months of 2018.
“More worrisome for PIL is the total debt outstanding of $3.46bn as at June 2018, of which $1.08bn was short term debt payable within 12 months,” Alphaliner observed.
To meet its short term cash needs, PIL has also made various sale and leaseback deals for its fleet of containerships in the last few years. The group had previously planned to launch a US dollar bond offering in 2018 but the notes issue was eventually suspended due to poor market conditions at that time.
Alphaliner stated Cosco is the most likely buyer of PIL, due to the close historical ties between the two companies and the complementary route network of PIL as Cosco has also indicated a strong interest to grow its presence in the North-South routes where PIL is currently present. PIL also cooperates with Cosco on various joint services.