UPDATE 1-Korea Line says in court receivership

Tue Feb 15, 2011 12:49am EST

Related Topics

* Korea Line starts restructuring process

* Court to handle its charter or freight payments (Add details, comments)

SEOUL Feb 15 (Reuters) - Korea Line Corp (005880.KS) said it has started restructuring after a local court approved placing the financially-strapped dry bulk group in receivership.

"The main reason for receivership was charter payments. If the market situation improves, we can graduate from court receivership within a year," a Korea Line spokesman told Reuters on Tuesday.

South Korea's second-biggest dry bulk shipping line filed for bankruptcy protection in late January, struggling with high-cost charter contracts amid a sharp drop in freight rates since the economic turmoil of 2008. [ID:nTOE70O053]

This had rocked confidence in the shipping industry and provoked fears that other bulk shippers may be exposed to Korea Line, weighing on their shares.

Korea Line operates 150 vessels, or 70 percent of its total fleet, borrowed from other shipping companies, many on long-term contracts finalised before the huge downturn in the dry bulk market.

Trading in Korea line shares had been suspended and was expected to resume on Wednesday, a spokesman said.

Under a court-appointed manager and its Chairman Lee Jin-bang, Korea Line's charter or freight payments will be subject to court decision as part of corporate rehabilitation.

The Baltic Exchange's main sea freight index .BADI, which gauges the cost of shipping commodities such as iron ore, grain and fertiliser, rose for a sixth session on Monday. [ID:nLDE71D217] (Reporting by Ju-min Park and Miyoung Kim; Editing by Jonathan Hopfner)

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