| SEOUL, June 7
SEOUL, June 7 Bulk shipper STX Pan Ocean Co Ltd
filed for court receivership on Friday, the latest
unit in the shipping-to-shipbuilding STX Group to face
restructuring to solve its mounting debt problems.
Trading in STX Pan Ocean shares was halted after the market
closed on Wednesday, as main creditor Korea Development Bank
(KDB) decided not to buy the debt-ridden shipper and no other
suitors emerged to bid for the company.
"At its current cash flow, (STX Pan Ocean) cannot help but
face a liquidity crunch as it cannot secure necessary funds to
repay debt to financial firms and charter costs," the company
said in a statement.
STX Pan Ocean had 5.51 trillion won ($4.94 billion) in total
debt as of the first quarter of 2013, of which 4.5 trillion won
consisted of debt such as corporate bonds and bank lending, KDB
Executive Director Ryu Heui-kyoung told reporters on Friday.
STX Pan Ocean underscored the necessity for a smooth court
receivership process, citing among many reasons its long-term
contracts with Vale SA and Fibria Celulose SA
STX Pan Ocean holds a $5.8 billion 25-year contract, signed
in September 2009, to own and operate eight Valemaxes to ship
cargo for Brazilian mining giant Vale.
Among the eight "very large iron ore carriers," six are in
service and the seventh was due to be handed over to STX Pan
Ocean from shipbuilder STX Offshore & Shipbuilding
The bulk shipper also signed a $5 billion 25-year deal in
October 2010 to operate about 20 vessels for Brazilian pulp
company Fibria, of which the first entered service last year, a
spokesman for STX Pan Ocean said.
If STX Pan Ocean's application for court receivership is
accepted by the Seoul Central Court, the court will orchestrate
subsequent steps such as choosing an administrator or
engineering debt writedowns, according to local rules.
STX Corp, a holding company of STX Group, and
affiliates STX Offshore & Shipbuilding Co Ltd, STX Heavy
Industries Co Ltd and STX Engine have
already applied to creditors for corporate restructuring earlier
Creditors' due diligence concerning STX Offshore is expected
to end "soon" in June, Ryu said, with broad plans for the
shipbuilder's restructuring to be decided in July at the latest.
Shares in STX Group units such as STX Corp and
STX Offshore & Shipbuilding Co Ltd extended losses,
plunging as much as 14.7 percent.
STX Corp raised a total 1.13 trillion won by shedding assets
including a stake in affiliate STX Energy and the controlling
stake in Singapore-listed STX OSV Holdings since last
However, the sales were not enough to solve the group's
liquidity issues due to falling ship prices following the global
financial crisis, disadvantageous payment conditions in a
buyer's market and difficulties in issuing corporate bonds, STX
Corp previously said.
($1 = 1,115.8500 Korean won)
(Editing by Matt Driskill)