KDB Decides to Inject 200 Bil. Won to STX Pan Ocean

SEOUL, KOREA- Korea Development Bank has decided to inject an additional fund of 200 billion won to STX Pan Ocean, Korea's No. 1 bulk carrier that has been under court receivership.According to banking sources on August 20, the state-run bank will finalize the plan in an internal investment review committee meeting to be held on the 22nd. For the amount to be lent, the bank is in talks with other creditor banks such as Korea EximBank, Korea Finance Corp. and Nonghyup Bank. A Korea Development Bank official said, "If other creditors refuse to participate, we will do it alone."

The main reason for the state-run bank's willingness to provide additional loans to the struggling shipper is that the company needs a certain amount of working capital to get back on its feet and improve its corporate value. There is no need for the company to pay back its debts as long as it is under a corporate workout program. But some other payment obligations like unpaid wages or debts from bareboat charter hire purchase agreements must be paid back before the commencement of a corporate workout program.

An official from Korea Development Bank said, "As STX Pan Ocean commissioned 59 vessels to STX Offshore & Shipbuilding for the 2008-2012 period, it must pay back the bill between 2013 and 2017. As the company must pay bills quickly but get revenue for years to come, it is likely to suffer a liquidity problem. That's why we need to lend the money for its working capital needs."

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