SINGAPORE (THE BUSINESS TIMES) – Pacific International Lines (PIL) is making an earlier-than-expected full repayment of US$1 billion (S$1.37 billion) in scheme debts by Dec 30, the boxship operator announced on Friday (Nov 26).
The creditors PIL intends to repay by Dec 30 are reinstated senior debt creditors comprising mainly financial institutions, as well as holders of issued option A and option B securities.
Upon redemption, option A securityholders will receive the principal amount together with accrued distributions.
Thanking holders of option B securities for voluntarily undertaking a 50 per cent haircut as part of PIL’s scheme of arrangement, the company said it will redeem the securities with each holder receiving 200 per cent of the principal amount in total.
This is inclusive of any distributions accrued to the date of redemption – and “above and beyond” PIL’s contractual obligations to the option B securityholders, said the company.
PIL said that going forward, it will “be a well-capitalised company with a solid financial structure and resilience to address and mitigate the cyclical nature of the industry”.
It added that the company has benefited from a positive upturn in shipping following its restructuring in the first quarter of 2021, which saw the implementation of various businesses, financial and operational initiatives.
“The global shipping industry, including PIL, has generally benefited since 2021 from strengthening freight rates due to restricted supply: Covid-related disruptions to supply chains and port operations have resulted in a shortage of containers and vessel delays which reduced available shipping capacity,” noted PIL.
Increased pandemic-related consumption of physical goods have also led to a rise in demand, according to PIL.
According to executive chairman Teo Siong Seng, the company has undergone a “most dramatic” turnaround in financial position over the past eight months since restructuring began.
“In addition to the market recovery, our strong business fundamentals, ongoing restructuring initiatives and the hard work of our employees have improved our overall position. With our healthy cashflow situation, we decided that it was only right that we reciprocate the support shown to us by our creditors and partners, and repay the debts owed to all our scheme creditors, ahead of schedule. We believe that they would benefit from the certainty of having cash returned to them earlier than anticipated,” said Mr Teo.
“By satisfying the terms of the scheme fully with the repayment and continued financial prudence, PIL will be able to enjoy a strong standing with financial institutions, customers and suppliers. This will enable PIL to strive ahead to grow a strong business built on a sustainable capital structure.”
News of the company’s early repayment plans comes after PIL earlier this year commenced its debt restructuring process on March 30.
Under the debt restructuring scheme, Temasek Holdings’ wholly-owned Heliconia Capital Management became the majority shareholder in PIL while pumping some $600 million to rescue the embattled company.
PIL had also issued US$128 million in aggregate principal amount of option A securities, and US$27.5 million in aggregate principal amount of option B securities.