Temasek unit in talks with PIL on $565m deal, say sources

A unit of Temasek is in talks for a potential investment of at least US$400 million (S$565 million) in Singapore shipping tycoon Chang Yun Chung's Pacific International Lines (PIL), according to sources familiar with the matter.

Heliconia Capital Management, a wholly owned subsidiary of Singapore's investment firm, could take a combination of equity and debt in the struggling shipping line, the sources said, asking not to be identified as the process is private.

Heliconia is keen to take a stake in PIL in part to secure logistics for food supplies to Singapore amid the coronavirus pandemic, they said.

PIL said last Tuesday it entered into a six-month exclusivity agreement with Heliconia in relation to a potential investment.

The company is the latest to come under stress as trade tensions between the United States and China affect global trade.

The industry has also been hit by the outbreak as lockdowns in countries led to weak consumer spending, causing many liners to cut services.

Spokesmen for PIL and Heliconia declined to comment beyond the earlier statement.

The discussions are preliminary, though more details could be firmed up in the next few weeks and may still change, the sources said. There is no certainty the talks will lead to a deal, PIL said last week.

Besides bank debt, PIL has a $60 million bond that is maturing in November, according to data compiled by Bloomberg.

The company has said there are likely to be events of default under its financing agreements including under the terms of the bonds.

It has started talks with 15 of its lenders and has obtained agreement from holders of 97.6 per cent of its debt to defer repayments for the rest of the year, it said.

PIL is the largest shipowner in South-east Asia operating services in Asia, the Middle East and Africa with more than 130 vessels, according to its website.

The Singapore company is the world's 10th-biggest container carrier, with 1.5 per cent of the market, according to data from Alphaliner. It has been selling its vessels in the past year as part of its efforts to raise funds to ease some of its financial strains.

Heliconia is best known for its relatively early-stage investments in growth companies from gaming-focused hardwaremaker Razer to One Championship - a martial arts-focused media business.

Its chief executive Derek Lau said in an interview last year that the fund had more than $1 billion in assets under management with "significant" dry powder that would be aimed at taking growth companies in Singapore to the global stage.

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A version of this article appeared in the print edition of The Straits Times on June 01, 2020, with the headline 'Temasek unit in talks with PIL on $565m deal, say sources'. Subscribe