Pacific Radiance seals $61m in state aid

Singapore offshore vessel operator secures government help, but analysts question whether it is enough.

Pacific Radiance has emerged as a recipient of up to SGD 85m ($61m) in financial support from the Singapore government.

It has been a beneficiary of IE Singapore’s Internationalisation Finance Scheme (IFS) and the re-introduction of SPRING’s Bridging Loan (BL).

The two measures were introduced by the Singapore government in late November 2016 to help to address the intensifying financing challenges faced by the offshore industry.

Pacific Radiance is said to have received the maximum of SGD 15m available under the BL scheme and the SGD 70m from the IFS.

The Singapore government is taking on 70% of the risk-share for both BL and IFS which could catalyse about SGD 1.6bn of loans over a period of one year.

“As expected Pacific Radiance was a recipient of government financing for both SPRING Singapore’s BL scheme and IE Singapore’s IFS,” said analysts at UOB Kay Hian.

“For the former, Pacific Radiance has already received and used a portion of the SGD 15m in loans, while the latter is technically approved with completion likely by the end of May or early June.

“While the disbursement of the SGD 70m is restricted to financing of projects that Pacific Radiance undertakes overseas, this still frees up cash flow that would have been otherwise committed for more immediate needs.”

The UOB Kay Hian analysts added that while the government financing aid is timely, it will only help bridge funding needs “for another quarter or so”.

Earlier this week Pacific Radiance reported a further deterioration in its financial performance with first quarter losses more than double those of a year ago.

It lost $15.2m in the first three months of 2017 against $6.8m seen in the same period last year. Revenue declined 24% to $13.9m, while costs crept up by 6% to $20.9m.

It blamed the decline in revenue on lower utilisation and lower charter rates of vessels from its offshore support services arm.