STX Pan Ocean Says Court Receivership Request Hinges on Creditor
STX Pan Ocean Co. (028670), the shipping arm of South Korean conglomerate STX Group, will make a decision on applying for court receivership after hearing from its largest creditor Korea Development Bank on its request for funding.
“No decision has been made as we’re still waiting to hear back from KDB,” Jang SJ, a spokesman at Seoul-based STX Pan Ocean, said by phone today. South Korea’s MoneyToday newspaper earlier reported the company will apply for court receivership as KDB rejected its request for 200 billion won ($179 million.) KDB cannot confirm STX Pan Ocean’s request for emergency funding, nor has it made a decision on whether to acquire the company, the bank said in an e-mailed response to questions.
Pan Ocean shares slumped by the daily limit 15 percent in Seoul today and were temporarily halted from Singapore trading as the company’s Chief Executive Officer Seon Ryung Bae stepped down “due to personal matters,” according to a Singapore Exchange filing. STX Group put its controlling stake in Pan Ocean up for sale last year after a slump in the shipping market in 2008 crippled the group’s ability to raise funds.
“The government was pushing to normalize the company by having Korea Development Bank buy its stake, but it seems like the bank came to the conclusion that the risk is too big,” said Kang Dong Jin, a Seoul-based analyst at HMC Investment Securities Co. “This indicates that the conglomerate’s restructuring may be delayed or even become impossible, as STX Group needed the cash from its STX Pan Ocean stake.”
Korea Exchange today requested STX Pan Ocean clarify its position on reports that it will seek court receivership or debt rescheduling by 6 p.m. on June 7. The company today asked for a suspension in Singapore trading pending “clarification of the rumor in the market in regard to the company will file for company reorganization,” according to a statement.
Pan Ocean is reviewing options including court receivership or restructuring after KDB decides whether to proceed with acquisition, the company’s spokesman Jang said. “We haven’t heard anything official from them yet,” he said.
STX Group was founded in 2001 by Kang Duk Soo, who used his life savings from a 27-year career at another of South Korean conglomerate or chaebol Ssangyong Group to build a business group spanning the manufacture of cruise ships, wind turbines and apartment blocks.
The group was built partly by buying financially struggling companies. In 2001, Kang bought Daedong Shipbuilding Co., then-South Korea’s eighth-largest shipbuilder, which had just exited court protection, and renamed it STX Offshore & Shipbuilding Co. Kang bought Pan Ocean Shipping Co. three years later while it was in bankruptcy protection.
Shares of STX Corp. (011810), STX Group’s listed holding company, slumped 15 percent to their lowest close since 2002 in Seoul today, according to data compiled by Bloomberg.
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