Seoul: Shares in STX Corp and its affiliates plunged across the board on Monday after the company said in a filing to the Korea Exchange that it plans to issue 5.39 million new shares to raise 307.8 billion won ($295.5 million) in capital.
The company also said it was investing 24.8 billion won in STX Group's China affiliate, while STX Engine said in a separate filing that it was pouring 41.4 billion won into the same company.
STX Corp fell its daily maximum of 15 percent to 62,600 won. Shares in STX Shipbuilding also dropped 12.0 percent to 29,700 won and STX Engine lost 13.46 percent to 42,450 won.
"There has been talk for months of STX raising additional capital through either a bond issue or new shares, but the company adamantly denied it," said Cheon Jae-cheol, an analyst at Daishin Securities.
"Now that they are proceeding with a new rights issuance, investors have turned cold," Cheon added.
Analysts also said STX was not in the best shape financially, with news of the new shares issuance unsettling a market already concerned about the company's liquidity.
An STX Corp official said the company "has no liquidity problem," adding that the rights issuance was "to streamline the company's balance sheet and to obtain operational capital."
STX Pan Ocean was relatively unscathed compared to other STX affiliates, closing down 5.04 percent to 1,980 won.
STX has expanded so rapidly taking many of its competitors by surprise though issues over liquidity are really catching up with the emerging giant. [16/6/08]
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