STX Units Rise on Speculation of Additional Loans: Seoul Mover

STX Offshore & Shipbuilding Co. (067250) led gains among STX Group units in Seoul trading on speculation that creditors will provide more loans to help revive the companies.

STX Offshore shares jumped by their 15 percent limit, the most since September 2008, to 3,990 won as of 1:36 p.m. STX Pan Ocean Co. (028670), South Korea’s biggest commodities shipping company under court receivership, also rose 15 percent, to 1,690 won.

Korea Development Bank, STX Group’s main creditor, may consider acquiring STX Pan Ocean and providing more loans to STX Offshore, Yonhap News reported yesterday after the market’s close. Debt at STX Group has mounted since it set up a $1 billion shipbuilding and offshore complex in Dalian, northeastern China, before the collapse of Lehman Brothers Holdings Inc. in 2008.

“There are expectations that the STX Group units will get help from the creditors,” said Park Moo Hyun, an analyst at E*Trade Securities Korea in Seoul. “But it will take some time for the companies to get out of their current problems.”

Korea Development Bank may consider buying STX Pan Ocean if the company’s value improves, Yonhap News said, citing the lender’s Chairman Hong Ky Ttack. The bank will sign a contract with STX Offshore next week to normalize the company, which could include providing more loans, according to the report.

Four STX Group units, including STX Offshore, are seeking voluntary debt rescheduling from creditors.

The group, whose businesses range from shipbuilding to components that go into vessels, has been trying to raise 2.5 trillion won ($2.2 billion) by selling stakes in units as bulk shipping rates fell and ship orders tumbled.

The Baltic Dry Index, a global measure of commodity-shipping rates, fell 0.9 percent to 1,117 yesterday and has dropped 91 percent from its peak in May 2008.

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Vipin V. Nair at vnair12@bloomberg.net

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