China Shipping Development will pay 11.7 billion won (HK$98.85 million) to three South Korean companies after losing a lawsuit. The mainland oil and bulk shipping firm said it would only book HK$75.4 million of the compensation as expense, since it had set aside a bad debt provision of HK$23.46 million last year for the potential loss. 'This might have negative impact to a certain extent on the profit of the company and its subsidiaries for the current financial year,' China Shipping said in a Hong Kong stock exchange announcement. The shipping company reported 1.3 billion yuan net profit in the first six months of this year, down 19 per cent from the same period last year. The dispute arose from a charter agreement with Korean company Huron three years ago. In December 2003, Huron chartered two China Shipping tankers, Dinhe and Daqin 74, for the delivery of crude oil to the port of Qunshan in Korea. The bills of lading of those shipments were opened by Korea Exchange Bank, Kookmin Bank, Woori Bank and National Federation of Fishery Co-operatives, with letters of credit totalling US$12.7 million. Huron settled all transport fees when China Shipping delivered the shipments. However, the Korean firm went into liquidation in January 2004, so it did not redeem the bills of lading from the banks. As a result, Kookmin Bank, Woori Bank and National Federation of Fishery Co-operatives filed a lawsuit in Korea against China Shipping in September 2004, claiming compensation of 11.97 billion won. The companies eventually agreed to settle the claims at 85 per cent of the original amount, plus interest of 5 per cent per annum. Shares of China Shipping yesterday rose 5.31 per cent to close at HK$11.90.