Temasek Holdings' Heliconia in $600m rescue package for PIL

In a presentation to bondholders on Thursday PIL detailed a financing package from Heliconia to rescue the financial strapped shipping line, which has applied to the courts for restructuring mandated under a Scheme of Arrangement in Singapore.

Heliconia has already tided PIL over immediate bankruptcy concerns in recent months with a $112m “emergency credit facility”. In stage 2 of the rescue deal Heliconia would inject $600m in what was termed a “comprehensive refinancing package”.

The company said, “financing provides necessary capital to repay critical vendors, and recalibrate PIL’s capital structure to sustainable levels.” It would comprise a mix of debt and equity and would be used to repay the emergency facility.

Explaining the needs for the rescue package the company stated in the presentation: “PIL’s liquidity situation is extremely strained due to the unstable macroeconomic environment, sizeable vendor overdues, and its unsustainable capital structure.

“Substantial, escalating overdues to critical vendors have impeded PIL’s ability to operate normally, and PIL requires a significant capital injection to restore long-term stability with vendors.”

The presentation revealed net losses by PIL exceeding $1bn over the last two years. The company lost $254m in 2018, and racked up net losses of $795m in 2019, which it attributed mainly to one-off impairment losses of $590m. The line reported revenues of $4.49bn in 2018, and $3.48bn in 2019.

Related:PIL seeks creditors' meeting to start restructuring

Under the restructuring proposal unsecured creditors and claims will be converted to perpetual securities. Secured claim debt facilities will be resized to 100% of their collateral value.

The Scheme of Arrangement requires approval from either by a majority in number representing 75% in value of each class of creditor, or at least 75% in value of at least one class of scheme creditors and approved by a majority in number representing at least 75% in value of all scheme creditors.

PIL warned that it did not believe it would secure a better proposal and that, “In absence of a comprehensive restructuring, PIL will likely face liquidation.”