Creditors vote in favour of Temasek-backed plan for Pacific International Lines' debt revamp

Singapore

CREDITORS of privately-held firm Pacific International Lines (PIL) have helped the insolvent boxship operator keep liquidation at bay: A significant majority of them on Feb 1 voted in favour of its debt restructuring plan bankrolled by heavyweight investor Temasek Holdings' wholly-owned Heliconia Capital Management.

After the plan is sanctioned by the court, Heliconia will become the majority shareholder in PIL, while the stakes held by the family of executive chairman Teo Siong Seng will be diluted to under 15 per cent.

PIL's creditors approved the scheme of arrangement by a simple majority (above 50 per cent) in number, representing at least 75 per cent in value of each class of creditors present and voting at the meeting, PIL said in a regulatory statement on Monday night.

All the creditors are now on board for the rescue deal, under which Heliconia will pump in US$600 million; PIL had earlier described this as its last resort and best offer.

The creditors comprise the holders of the S$60 million tranche of 8.5 per cent notes that have been overdue since last November, other unsecured claimants as well as secured lenders.

Creditors with unsecured claims will have their claims converted into US-dollar denominated perpetual securities, possibly at up to par value and tradable over the counter, with distribution rates to include a step-up feature.

Secured lenders will have the debt facilities re-sized to 100 per cent collateral value, with valuations reflective of current market conditions.

PIL will apply to the High Court for it to sanction the scheme; a court hearing is expected to be held later this month or in March. The debt restructuring exercise is expected to be completed by the first half of 2021.

Mr Teo said in the statement: "The comprehensive financing package offered by our investor, in conjunction with a holistic restructuring of PIL's financial liabilities, will recalibrate PIL's capital structure for long-term sustainability, thereby allowing PIL to emerge as a stronger, leaner and better-capitalised company, and one that will provide creditors with a clear path to recovery going forward."

PIL, incorporated in 1967 and controlled by Mr Teo's family, was sinking under a sea of debt until last year, when Heliconia threw it a temporary credit lifeline of US$112 million to help it to meet operating cash flow needs.

The investment firm will now be pumping US$600 million into PIL by a mix of debt and equity, with the US$112 million to be repaid. PIL's debts, including loans, lease liabilities, bill payables and notes, surpass US$3.3 billion.