Korea Line Corp., Korea’s second-largest operator of dry-bulk ships, filed for receivership after rates tumbled to the lowest in almost two years because of a global oversupply of vessels.
The filing was made at the Seoul Central District Court on Tuesday, the company said in a regulatory statement. It didn’t say how large its debts were. Seven calls to the Seoul-based company, including to its media and investor-relations offices, went unanswered or were engaged.
The shipping line, unprofitable in six of the past seven quarters, halted its shares as it works to restructure debt. Dry-bulk rates have plunged 58 percent in the past year amid an expanding global fleet and slowing demand for commodities in China because of government efforts to cool economic growth.
“This is probably the best option left for Korea Line,” said Um Kyung-a, an analyst at Shinyoung Securities Co. in Seoul. “With the Baltic Dry Index where it is now, the company wasn’t earning enough to cover costs and debt.”
The Baltic Dry Index, a measure of rates for vessels used to ship iron ore, coal and other commodities, fell 1.8 percent on Monday to 1,345, the lowest since Feb. 4, 2009.
Korea Line operated 51 vessels at the end of September. It ships iron ore, coal and liquefied-natural gas for customers including Posco, Korea Electric Power Corp. and Korea Gas Corp., according to its website. Its dry-bulk fleet trails only STX Pan Ocean Co. among Korean shipping lines.
The company had total debts of 2.23 trillion won ($2 billion) at the end of September, according to its third- quarter financial statement. The shipping line made a 104.2 billion won loss in the quarter, the statement said.
Korea Line dropped 1 percent to 25,200 won on Tuesday before the shares were halted. It fell 40 percent in the past year, while the KOSPI Index rose 26 percent. The company had a market value of $371.6 million, according to data compiled by Bloomberg.
About 277.7 million deadweight tons of bulk carriers were on order at the end of last year, representing 52 percent of the current fleet, according to Clarkson Plc, the world’s largest shipbroker.
(Bloomberg)
