STX Group sells affiliate

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STX Group sells affiliate

As a part of efforts to increase liquidity, cash-strapped STX Group has agreed to sell its controlling 43.15 percent stake in affiliate STX Energy to Japan’s Orix Corporation for 270 billion won ($240.5 million), the company said in a regulatory filing released Thursday.

STX Group said board members made the decision at a meeting earlier that day.

The deal will make Orix the new owner of STX Energy, which also runs affiliates STX Electric Power, STX Energy Canada and STX RHL.

This is the second time that Orix scooped up STX Energy shares after it bought a 43.1 percent stake in the company for 360.1 billion won last October.

“Proceeds from the sale of STX Energy will be used to improve STX Group’s financial sheets and for corporate management,” said an executive at STX Group. “This will also pave the way for the group’s plan to rechart its business structure to focus more on shipbuilding.”

STX Energy reported 1.28 trillion won in revenue and posted 67.5 billion won in operating profit in 2012.
When STX Group officially sells STX Energy to Orix on July 18, the number of affiliates under the group will shrink to two.

STX Group has been scrambling to shed assets to resolve mounting debt problems in the face of snowballing losses stemming from the prolonged slump in the global shipping market.

The group’s two other affiliates - STX Offshore and Shipbuilding and STX Pan Ocean - are undergoing debt-restructuring plans and normalization of corporate operation in cooperation with creditor banks.

Creditors overseeing the voluntary restructuring agreement of STX Offshore and Shipbuilding confirmed earlier this month they are seeking to inject an additional 1 trillion won this year to save the flagship of the nation’s 14th-largest conglomerate.

In June, Seoul Central District Court decided to begin a court-managed workout program for STX Pan Ocean, Korea’s largest bulk carrier and flagship of STX Group.

Meanwhile, the news of Orix buying STX Energy boosted stock prices of STX Group and its affiliates.

Shares of STX Offshore and Shipbuilding edged up 2.04 percent to close at 3,250 won.

STX Corp, a holding company for STX Group, rose 4.59 percent to finish at 1,595 won, while STX Pan Ocean gained 1.71 percent and STX Engine added 0.58 percent.

BY Kim mi-ju []
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