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Valemax operator STX Pan Ocean applies for court receivership
Bulk shipper STX Pan Ocean Co Ltd filed for court receivership, the latest unit in the shipping-to-shipbuilding STX Group to face restructuring to solve its mounting debt problems.Trading in STX Pan Ocean shares was halted after the market closed on Wednesday, as main creditor Korea Development Bank (KDB) decided not to buy the debt-ridden shipper and no other suitors emerged to bid for the company.“At its current cash flow, (STX Pan Ocean) cannot help but face a liquidity crunch as it cannot secure necessary funds to repay debt to financial firms and charter costs,” the company said in a statement.STX Pan Ocean had 5.51 trillion won ($4.94 billion) in total debt as of the first quarter of 2013, of which 4.5 trillion won consisted of debt such as corporate bonds and bank lending, KDB Executive Director Ryu Heui-kyoung told reporters on Friday.STX Pan Ocean underscored the necessity for a smooth court receivership process, citing among many reasons its long-term contracts with Vale SA and Fibria Celulose SA .STX Pan Ocean holds a $5.8 billion 25-year contract, signed in September 2009, to own and operate eight Valemaxes to ship cargo for Brazilian mining giant Vale.Among the eight “very large iron ore carriers,” six are in service and the seventh was due to be handed over to STX Pan Ocean from shipbuilder STX Offshore & Shipbuilding in April.The bulk shipper also signed a $5 billion 25-year deal in October 2010 to operate about 20 vessels for Brazilian pulp company Fibria, of which the first entered service last year, a spokesman for STX Pan Ocean said.If STX Pan Ocean’s application for court receivership is accepted by the Seoul Central Court, the court will orchestrate subsequent steps such as choosing an administrator or engineering debt writedowns, according to local rules.STX Corp, a holding company of STX Group, and affiliates STX Offshore & Shipbuilding Co Ltd, STX Heavy Industries Co Ltd and STX Engine have already applied to creditors for corporate restructuring earlier this year.Creditors’ due diligence concerning STX Offshore is expected to end “soon” in June, Ryu said, with broad plans for the shipbuilder’s restructuring to be decided in July at the latest.Shares in STX Group units such as STX Corp and STX Offshore & Shipbuilding Co Ltd extended losses, plunging as much as 14.7 percent.STX Corp raised a total 1.13 trillion won by shedding assets including a stake in affiliate STX Energy and the controlling stake in Singapore-listed STX OSV Holdings since last year.However, the sales were not enough to solve the group’s liquidity issues due to falling ship prices following the global financial crisis, disadvantageous payment conditions in a buyer’s market and difficulties in issuing corporate bonds, STX Corp previously said. (Reuters)
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