[THE INVESTOR] China-backed AFC Korea has been selected as the preferred bidder for cash-strapped STX Corp., the Korean trading company said in a regulatory filing on Dec. 27.

AFC Korea has reportedly offered a price tag above 70 billion won (US$65.62 billion) for an 86.28 percent stake owned by STX creditors -- Korea Development Bank holds a 39.59 percent stake and NongHyup has 10.07 percent. AFC beat three other potential bidders including Pan Ocean, which was once a part of STX, and textile manufacturer Global SAE-A.

“In addition to the bidding price, creditors probably took into consideration the synergies that the deal could create,” a KDB spokesperson told The Investor.

AFC Korea is a private equity fund whose parent company is backed by Chinese state-owned companies. The strategic investor for the firm is said to be a resort and trading company that will be shouldering up to 20 percent of the acquisition costs.

It will conduct due diligence over the next three weeks before it signs a sales and purchase agreement with STX creditors.

The bid came six months after a consortium led by a midsized shipping firm SM Group -- which owns Korea’s No. 2 bulk carrier Korea Line Corp. -- failed to buy STX for 28.6 billion won, due to the low price.

Trading of STX shares was suspended on the Seoul bourse in mid-February due to the erosion of its capital base.

By Park Ga-young (gypark@heraldcorp.com)