Pacific Forum Line (PFL) vainly asked for a bailout from its shareholders, including the New Zealand government, before it was bought by the Samoan government last month, its paperwork reveals.
The accounts for Pacific Forum Line NZ filed to the Companies Office on October 1 show that the key provider of shipping services to Pacific islands was in breach of a bank covenant and its auditor doubted it would continue as a going concern without new funding.
The Government of Samoa purchased 100 percent of PFL on October 5 and promised to maintain services to Pacific countries.
The shipping line had been owned by the governments of 12 Pacific countries and Labour's Phil Goff had asked why it was being sold in secret, speculating that Singaporean company Sofrana was a likely buyer.
A note to the accounts for the year ended March 31, 2012 said that at a special general meeting after balance date directors requested financial support in the form of advances from shareholders.
"Shareholders were not willing to inject capital," the note said.
Auditor PricewaterhouseCoopers said if the purchase of the parent company by the Samoan shareholder did not proceed or sufficient working capital and funding was not found then "the group may not be able to continue as a going concern".
The accounts show that the company was not meeting an interest-cover covenant but it was meeting an equity covenant.
PFL was founded in 1978 to help economic development in the Pacific by providing competition to ensure private shipping operators did not create a monopoly.