STX Shipbuilding put on path to court-led restructuring
Financially shaky STX Offshore and Shipbuilding Co. will be put under a court-led restructuring scheme this month, its creditors said Wednesday, ending their yearslong financial aid amid ongoing efforts to revamp ailing industries such as shipping and shipbuilding.
The creditors, led by the state-run Korea Development Bank, discussed earlier in the day whether to extend a lifeline to the financially troubled shipbuilder. But they reached a consensus to place the shipyard under court receivership.
"There are no reasons or gains to continue a creditor-led rehabilitation scheme (for STX Shipbuilding), and the company also believes court receivership is inevitable," the KDB said in a statement.
The policy lender said the creditors will finalize details for the shipbuilder to be placed under court receivership by the end of the month.
The focus will be placed on delivering ships under construction, and massive restructuring moves will be implemented, the KDB said.
STX Shipbuilding, once the country's No. 4 shipbuilder, has been under the control of its creditors since April 2013, in line with a protracted slump in the shipbuilding sector.
STX Shipbuilding was affiliated with the now-defunct STX Group that had a business portfolio that ranged from construction and shipping to shipbuilding and energy.
The creditors had provided over 4 trillion won (US$3.36 billion) to the shipyard, but it is still reeling from losses.
Last year, the shipyard logged an operating loss of 314 billion won following a loss of 1.5 trillion won the previous year.
Its debt owed to financial institutions reached 6 trillion won.
Creditors extended additional aid of 450 billion won to the shipyard late last year and sought to reorganize STX Shipbuilding's business portfolio to focus on tanker ships and small-sized LNG carriers.
Should the shipbuilder be put under court receivership, its creditors have to set aside an additional 2.8 trillion won in loan-loss reserves. In particular, KDB and the Export-Import Bank of Korea, the shipbuilder's two major creditors, are required to set aside over 2 trillion won in provisions against bad loans extended to STX Shipbuilding.
Local shipyards have been suffering massive losses due to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump.
The country's top three shipyards - Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding and Marine Engineering Co. - suffered a combined operating loss of 8.5 trillion won last year, and a huge chunk of the loss, some 5.5 trillion won, came from Daewoo Shipbuilding.
Meanwhile, Financial Services Commission Chairman Yim Jong-yong said the government and creditors will push for a speedy restructuring of smaller shipyards in the country.
The government is working to draw up a set of comprehensive measures to overhaul financially shaky shipyards early next month.
Industry sources said local lenders had provided a combined 7.4 trillion won in financial aid to the country's three mid-sized shipyards - STX Shipbuilding, SPP Shipbuilding Co. and Sungdong Shipbuilding and Marine Engineering Co. - since they were put under creditor-led restructuring schemes.
By company, a total of 4.5 trillion won has been provided to STX Shipbuilding since April 2014. Creditors have extended a total of 1.1 trillion won to SPP Shipbuilding since May of last year. And Sungdong Shipbuilding received a total of 1.9 trillion won in financial aid from its creditors since May 2010, the sources said.