Contracts were canceled for four wood pulp-carrying ships and one container vessel, helping pare investments by 21 percent to $827.2 million, the Seoul-based company said in regulatory filings today. The commodity carriers were ordered from STX Offshore & Shipbuilding Co. (067250)
Pan Ocean is working on a revival plan to help raise funds after a slump in cargo rates caused losses and prompted it to seek court protection in June. The shipping line sought the receivership after its main creditor and second-biggest shareholder Korea Development Bank decided against buying the company from debt-ridden STX Group.
Pan Ocean ordered 20 ships with STX Offshore for $1 billion in November 2010 to haul wood pulp for Brazil’s Fibria Celulose SA (FIBR3) under a 25-year contract. The Brazilian company said in August it was in talks to renegotiate the deal.
Shares of Pan Ocean closed unchanged at 1,975 won in Seoul before the announcements. The stock has dropped 58 percent this year, the sixth worst performer on South Korea’s benchmark Kospi index. STX Offshore rose 2.3 percent to 3,930 won today.
STX Offshore was building the ships at its yards in South Korea and China. The shipbuilder has been restructuring its debt with creditors since August as an excess capacity of ships led to a drop in orders last year and an investment in its China yard caused it to run out of cash.
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