Singapore-based Pacific International Lines (PIL) has told creditors that if it does not back its restructuring plan in a vote on February 1st, it will go under and creditors might receive as little as 2¢ on the dollar.
The last-chance restructuring plan was shown to creditors on November 11th. It would entail a $600m cash injection from Heliconia, a wholly-owned subsidiary of Tamasek. That investment would be conditional on the acceptance by the noteholders of a scheme that would convert debt into a perpetual securities scheme.
PIL told creditors that the restructuring of PIL’s debts had been “heavily negotiated over many months with the investor and the lenders, and there is no scope for further changes”.
Under the plan, PIL’s existing shareholders would see their stake diluted to 15% of what it was. The carrier said: “PIL does not believe it will be able to secure a better proposal for the company and its stakeholders from any other investor.”
PIL has blamed its dire financial position on the challenging years for the container shipping industry between 2018 and 2020. It said that “the downturn had been further exacerbated by the prolonged impact of the Covid-19 pandemic”.
PIL had a net loss of $795m in 2019 and a net loss of $254m in 2018. It said this month that, despite the improvements in the liner shipping industry in the second half of last year, the company remained over-leveraged with an untenable capital structure.