Singapore-based container ship operator Pacific International Lines (PIL) has agreed with most of its financial lenders to defer debt payments and is in talks with a unit of Singapore investment company Temasek for a potential investment.

PIL said in a statement on Tuesday that it had made significant progress in cutting asset costs due to the challenges the sector has been facing but the coronavirus pandemic had made matters worse.

"Due to the situation, the company had commenced discussions with 15 of its financial lenders with a view to concluding a formal agreement concerning a debt-reprofiling plan," the privately held firm said.

Years of overcapacity, low freight rates and global trade tensions have been impacting the industry.

PIL, the world's 10th-largest container ship operator, said it had obtained the in-principle approval of financial lenders, who represented about 97.6 per cent of its total debt, to defer principal and interest payments until Dec 31. It is also in talks with the other lenders.

PIL said it had entered into a six-month exclusive agreement with Heliconia Capital Management, a fully owned subsidiary of Temasek, regarding a potential investment.

PIL, which is being advised by Evercore Asia (Singapore) on its strategic and capital raising plans, said it is in early negotiations with Heliconia. Heliconia confirmed the talks but declined further comment.

REUTERS