STX Pan Ocean files

Struggling bulker owner STX Pan Ocean filed for court receivership in Korea on Friday in a widely expected move to restructure its business.

"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.

"Such circumstances forced us to take a drastic step."

The filing was made to the Seoul central district court, which must now review the application and decide whether to proceed with a reorganisation.

It also applied for a "preservation of properties."

The news is another blow to giant STX Corp, whose STX Offshore & Shipbuilding is being run by creditors.

Rumours began to swirl in the market on Wednesday that the company could file after state-owned lender KDB reportedly pulled out of a deal to buy it - and turned it down for an emergency loan of KRW 200bn ($178m).

The Maeil daily quoted a company official as saying: “We had no choice but to go for court receivership when the KDB deemed it impossible to take us over.”

Debt will now be frozen. Total liabilities are thought to be around KRW 4.4 trillion.

New CEO Chun Il Yu, who was only appointed on Wednesday, said: “We will undergo intensive restructuring and substantially improve finances to emerge from the corporate revival process and normalise operations as early as possible.”

This is its second such filing, following a 1990s restructuring as Pan Ocean Shipping, after which which it was bought by STX.

STX Pan Ocean has a fleet of 97 owned vessels, plus 249 chartered-in ships. Of the latter, about two-thirds have less than a year remaining on their terms.

It also has 28 newbuildings on order.