STX to unload stake in its shipping subsidiary

STX Group said yesterday it will sell its stake in a key affiliate to improve its financial health amid a drawn-out recession in the global shipping and shipbuilding markets.

The group said yesterday it will sell off its stake in STX Pan Ocean, a leading shipping company. The unit suffered an operating loss of 275 billion won ($255 million) in the first nine months of this year.

STX Group will abandon its shipping unit to concentrate on the shipbuilding business. Both industries are struggling through severe downturns, according to the group.

“The sale of STX Pan Ocean will serve as a critical point to restructure the entire group centering on the shipbuilding business with stable energy and plant subsidiaries,” the group said in a statement.

According to the financial markets, the group is in talks with investors about the sale.

STX Pan Ocean had 5.7 trillion won in sales and 23 billion won in operating loss last year. STX Corporation own a 27.36 percent stake in the company.

Because 80 percent of ships operated by STX Pan Ocean are bulk carriers, a unpopular type of ship these days, the company is suffering snowballing losses.

STX Group signed an agreement with its main creditor, Korea Development Bank, in May to strengthen its financial health.

The group has been trying to sell stakes in STX Energy and STX OSV. It selected Japanese financial group Orix as the preferred bidder to buy the energy unit. The group plans to sell a 49 percent stake in its energy subsidiary by October. It also merged STX Metal and STX Heavy Industries as part of the plan.

By Song Su-hyun [ssh@joongang.co.kr]