Shares of STX Pan Ocean Co. (028670), the South Korean shipping line that’s under court receivership, and its affiliates were halted for trading in Seoul after stock prices doubled in the past eight trading sessions.
STX Pan Ocean, STX Corp. and STX Heavy Industries Co. are suspended for trading today, the Korea Exchange said in a regulatory filing yesterday. Shares of Pan Ocean, the country’s largest commodities-shipping company, jumped 99 percent since the July 22 close in Seoul, while STX Heavy increased 163 percent and STX Corp. 156 percent in that time. The stocks will resume trading on Aug. 5 and will be monitored by the regulator until Aug. 7, it said.
Creditors agreed on a debt restructuring of the group’s shipbuilding unit on July 31, prompting investors to bet on a turnaround. The conglomerate, with businesses ranging from shipbuilding to components, has been trying to raise 2.5 trillion won ($2.2 billion) by selling stakes after a slump in charter rates and orders for new vessels prompted flagship Pan Ocean to file for court protection in June.
“Investors have been irrational,” said Park Moo Hyun, an analyst at E*Trade Securities Korea in Seoul. “Investors are being too optimistic on news that creditors will help revive STX Group units. They aren’t considering the stock write-offs that will follow as part of the restructuring plan.”
The shipping company today requested the lifting of a trading halt of its Singapore-traded stock.
Pan Ocean, STX Offshore & Shipbuilding Co., STX Corp. (011810), the group’s holding company, and STX Heavy all gained 15 percent each in Seoul trading yesterday. The benchmark Kospi index rose 0.4 percent.
Kang Duk Soo, who founded STX Group in 2001 with his life savings, resigned as the chief executive officer of Pan Ocean, the shipping company said today in a statement to the Singapore stock exchange.
A South Korean court accepted Pan Ocean’s filing to seek protection in June. The shipping company sought court receivership after Korea Development Bank, the main creditor and Pan Ocean’s second-biggest shareholder, decided against buying the company from debt-ridden STX Group.
Korea Development Bank, which was considering buying Pan Ocean through its private-equity arm, decided against using that route after evaluating the shipping company, the lender’s Executive Director Ryu Heui Kyoung said on June 7.
Pan Ocean had about 300 vessels, including 97 it owns, when it filed for court protection. About a third of those ships are operated under long-term contracts with companies such as Brazil’s Vale SA and South Korea’s Posco.
The Baltic Dry Index (BDIY), a global measure of commodity-shipping rates, has fallen more than 90 percent from its peak five years ago because of excess capacity.
Since the credit crisis, orders to build new ships have plunged. Contracts for new vessels halved to $84.7 billion last year, compared with $174.7 billion in 2008, according to Clarkson Plc, the world’s biggest shipbroker.
Pan Ocean had 4.5 trillion won of loans, ship financing and other debt, Korea Development Bank said in June. It had cash and near cash of 173 billion won at the end of March, compared with 287.8 billion won at the end of last year and 501 billion won in 2011, according to its financial statements.
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