Former member of parliament SS Teo is likely to see his beleaguered Singaporean shipping line saved by a unit of the republic’s sovereign wealth fund.
Under intense financial pressure for the past couple of years, Teo’s Pacific International Lines (PIL) revealed today that Heliconia Capital Management, part of Temasek Holdings, the world’s eighth largest sovereign wealth fund, is looking at making a major investment into the containerline.
PIL has entered into a six-month exclusivity agreement starting today with Heliconia over the potential investment as it fights to keep its head above water with creditors and suppliers demanding payments.
In a release to the Singapore Exchange today, PIL said it is in discussions with 15 lenders over debt rescheduling and has obtained approval in principle from a majority of them representing 97.6% of its total debt to defer principle and interest payments until the end of the year as well as getting a guarantee on a formal standstill on enforcement actions through to December 31.
PIL is in touch with the two lenders who have yet to agree to a debt rescheduling with one of them issuing a letter of demand on May 11 for $12,641,059.38 to be paid within 10 business days.
The company is also in discussions with a group of its lessors trying to cut its payment commitments.
In the note to the stock exchange today, PIL warned of the risk of defaulting, stating: “[T]here are likely to be events of default arising under its financing agreements including under the terms of the S$60 million in principal amount of fixed rate bonds due 2020”.
PIL’s troubles have been well documented in recent months. The world’s tenth largest containerline with 350,390 slots in its dwindling fleet, PIL has been busy offloading assets all year.
PIL ships have been detained and late charter and bunker payments have made the headlines regularly. The privately held Singapore liner quit the transpacific tradelane in March, having exited the Asia-Europe trades in April last year. It has also sold its stake in Pacific Direct Line (PDL), which operates in the South Pacific as well as selling many of its largest ships in February and March.
Singamas, the box manufacturing company also controlled by the Teo family, reported in March that PIL owes it $147.7m, the majority of which was overdue.
Temasek has already come to the rescue of PIL on at leat one occasion. Last year, Alphaliner revealed that in 2018 PIL received previously unreported loans from Temasek Holdings-linked SeaTown Holdings.
If Temasek unit Heliconia does come onboard it will be the latest in raft of government interventions around the world to save containerlines that has seen state aid dished out in various forms to lines in China, South Korea, Taiwan and France in recent months since the coronavirus sparked a historic drop in demand in the container shipping segment.
Heliconia’s chairman is Lim How Teck, who worked with Neptune Orient Lines (NOL) from 1979 to 2005.