SINGAPORE's Pacific International Lines
(PIL), ranked 10th in world container carrier, has issued a statement to
dismiss 'rumours' and 'false claims' that it faces bankruptcy.
PIL managing director Teo Siong Seng Teo
said it sold six 12,000 TEU box ships to Seaspan and Wan Hai, which was
announced in March, at a price "above book valuations".
A string of divestment deals in recent months that have earned US$1
billion were not driven by a need to reduce debt, he said, but to
rationalise the family-owned portfolio in the light of unfolding
unfavourable macroeconomic forces, according to Mr Teo, reported
London's Lloyd's List.
PIL has sold factories run by its Hong Kong-listed subsidiary, Singamas.
It has also sold its controlling stake in Pacific Direct Line and a
dozen vessels over the past 16 months.
However, Mr Teo did admit some of the funds would be used to pay down outstanding debt.
This comes amid reports that the carrier has chalked up large bunker
bills, leading up to the arrest of a vessel on its fleet in January by
one affected supplier. The market has come to link its recent
divestments and troubled relations with bunker suppliers with a
developing cash crunch.
"PIL would like to clarify that these rumours are totally false and the
information and content derived therefrom are unfounded," it said.
It said that it and its subsidiaries in China "have fully resumed
operations" and that the company "has been making steady progress and is
currently actively preparing for a strong rebound after the epidemic."
"In the face of an increasingly complex and uncertain global market
environment, PIL has remained resilient by embarking on a service
rationalisation which will focus our efforts on key liner markets in
Asia, the Middle East, Africa, Oceania and South America," said the
company statement.
"Our strategic business integration has enabled us to be well-positioned
in capturing market opportunities brought about by the Belt and Road
Initiative, and moving forward, PIL will continue to strengthen our
leading position in the north-south route," it said.
Including these vessels, PIL has sold seven of a dozen of 12,000 TEU
series of ships delivered from YZJ plus three others this year. This
followed on from the sale of about half a dozen smaller vessels the year
before.
Mr Teo explained that a decision was made to withdraw from the
transpacific trade early this year, leading to the sale of tonnage -
including some 12,000-TEU units - plying this east-west trade.
"We believe the north-south and south-south trades would be more robust
compared to the long-haul transpacific and Asia-Europe trades," Mr Teo
said.
PIL has retained five 12,000-TEU ships, four of these are still trading
in the Red Sea and one other plying services lined for Africa.
The shipping group had $4.9 billion of liabilities and in excess of $351
million cash and short-term deposits on its books as of June 30, 2019.
It owed $680 million to trade creditors and ran up $1.14 million in
financial leases prior to the sale of the seven 12,000-TEU container
ships.FAXTEXT = PIL's trade credit woes mounted when "bunker prices shot
up dramatically" at the start of this year, causing the group to
"exhaust" credit limits and chalk up outstanding bills, Mr Teo said.
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