STX Pan Ocean files for receivership

JUNE 7, 2013 — Dragged down by the continuing problems of the bulker market, Seoul and Singapore listed STX Pan Ocean Co., Ltd. filed for receivership in Seoul Central District Court today.

 ”We have faced a liquidity crisis due to mounting debts and losses that stem from falling freight rates and an oversupply of ships in line with the global economic slump,” the company said in a statement reported by the Yonhap News Agency. “Such circumstances forced us to take a drastic step (court receivership).”

According to the Financial Times, STX Pan Ocean suffered cumulative losses of $437 million in the past two financial years and its net debt at the end of March stood at $3.1 billion, or six times its equity. The decision to file for receivership followed unsuccessful efforts to secure $179 million of new funding from its main creditor, Korea Development Bank.

The woes at STX Pan Ocean have been contributing to the overall problems at STX Group, one of South Korea’s biggest conglomerates. Other units that have also been in talks with creditors over debts include STX Heavy Industries and STX Offshore & Shipbuilding.

Main creditor Korea Development Bank (KDB) and others have agreed to pump a combined 900 billion won (US$811 million) into STX Corp. and its shipbuilding unit STX Offshore & Shipbuilding, Yonhap reported today, noting that the banks are now reviewing plans to inject liquidity into troubled STX Heavy Industries Co. and STX Engine Co.

STX has already sold off its STX Offshore shipbuilding unit (which is now controlled by Fincantieri as Vard) and has been looking to sell off STX Europe shipbuilding operation, which essentially now consists of STX Finland and STX France.