STX Pan Ocean Co., a commodities shipping operator, led drops among STX Group units in Seoul trading after failing to draw buyers for a stake as part of plans to raise 2.5 trillion won ($2.2 billion) to pay debt.
Pan Ocean fell 10 percent, the biggest decline in almost two months, to 3,970 won at the close in Seoul. STX Corp., the South Korean group’s holding company and Pan Ocean’s biggest shareholder, dropped 6.9 percent to 6,310 won, the lowest closing price since Feb. 2, 2005.
STX Group is selling assets and working with creditor Korea Development Bank on ways to improve its finances. The moves follow a slump in dry-bulk freight rates and a collapse in demand for new vessels that hit earnings at the group’s shipbuilding businesses and at Seoul-based Pan Ocean, the nation’s biggest commodities-shipping company.
“STX Pan Ocean needs to eliminate risk by separating from the group and to raise funds by reinforcing its credit rating or conducting a rights offering,” Park Eun Kyung, an analyst at Samsung Securities Co. in Seoul, wrote in a note dated March 29. “A Korea Development Bank-led private equity fund will likely accelerate efforts to acquire the firm.”
The group didn’t receive any letters of intent for a 36 percent stake in Pan Ocean, STX Group said March 29 after the market’s close. The group said it will discuss the sale plan with its main creditor bank.
State-owned Korea Development Bank, the main creditor bank and Pan Ocean’s second-largest shareholder, said last month it will consider buying the stake in the commodities shipping company if STX Group fails to find a buyer in the public bid.
Pan Ocean operates a fleet of about 400 owned and chartered ships, including dry-bulk vessels, container ships and tankers.
STX Offshore & Shipbuilding Co., the third-biggest shareholder of Pan Ocean, fell 6 percent. STX Heavy Industries Co. dropped 3.8 percent.
STX’s three main companies, Pan Ocean, STX Offshore and STX Corp., have 1.16 trillion won in bonds and loans maturing this year, about 20 percent of their outstanding debt, according to data compiled by Bloomberg. The group’s companies are interlinked through cross-shareholdings.
The group in December sold its entire stake in STX OSV Holdings Ltd. for 455 million euros ($582 million) to Fincantieri SpA of Italy. In October, it raised 360 billion won by agreeing to sell a 43 percent stake in unit STX Energy Co. to Tokyo-based Orix Corp.