PIL’s 2 investee companies in China went bankrupt last year

In a media report on Monday (1 Jun), it was disclosed that a unit of Temasek Holdings, Heliconia Capital Management, is in talks with the debt-ridden Pacific International Lines (PIL) to put in at least US$400 million (S$565 million) into PIL run by former Nominated Member of Parliament and PBM holder Teo Siong Seng (‘Temasek’s unit in talk to sink more than $0.5b into PIL run by PBM holder S S Teo‘).

PIL is currently under tremendous financial stress. Wall Street Journal reported that DBS Bank is one of PIL’s biggest lenders, with a US$260 million exposure, and Bangkok Bank in Thailand is owed US$220 million. Temasek-linked entities are also owed around US$140 million (‘Singapore’s PIL Seeks Temasek Investment for Survival‘). Besides bank debt, PIL has a $60 million bond that is maturing in November.

Despite the high debt carried by PIL, the Temasek’s unit was willing to consider sinking more money into PIL, taking a combination of equity and debt in the struggling PIL.

According to sources, the reason given for the “investment” into PIL is to help “secure logistics for food supplies” to Singapore amid the coronavirus pandemic. Interestingly, Temasek sold off state-owned Neptune Orient Line (NOL) to the French 4 years ago (2016) to get out of the shipping business.

Two Chinese investee companies of PIL went bankrupt

On its current Chinese website, PIL mentioned that it founded Dalian Shipbuilding Industry Marine Services (大连船舶重工集团船务工程有限公司) with other partners in 2009, and successfully acquired Dalian Shipbuilding Industry Steel Company (大连船舶重工集团钢业有限公司) in 2011 through Dalian Shipbuilding Industry Marine Services.

However, on its English website, PIL has removed any mentioning of these 2 associate Chinese companies:

Further online checks revealed that, in fact, the two said Dalian investee companies of PIL have been declared bankrupt by a Chinese court in Dalian last year, at the request of creditors due to debt issues.

PIL invested and founded Dalian Shipbuilding Industry Marine Services together with Dalian Shipbuilding Industry Company (大连船舶重工集团) and Anshan Iron & Steel. PIL was the second largest shareholder in the company (18%) after Dalian Shipbuilding Industry Corporation (67%). Anshan owned 15%.

Since 2016, the accumulated losses of Dalian Shipbuilding Industry Marine Services and Dalian Shipbuilding Industry Steel Company reached RMB633 million (S$127 million) and RMB422 million (S$84 million) respectively before the 2 companies were declared bankrupt.