STX, STX Heavy Industries may head for court receivership

Creditors of STX Offshore & Shipbuilding Co., South Korea’s fourth-largest shipbuilder that is heading for court management, are also considering to put the shipbuilder’s affiliates STX Heavy Industries Co. and STX Corp. under court receivership. They plan to keep STX Engine Co. on creditor-led restructuring program longer as it is less exposed to the debt-ridden shipbuilder.

According to sources from STX Offshore & Shipbuilding’s creditors including state-run Korea Development Bank (KDB) on Monday, the creditors are considering filing for court receivership for STX Heavy Industries of which business heavily relies on the performance of its affiliate shipbuilder STX Offshore & Shipbuilding. About 43 percent of the heavy equipment maker’s sales come from the ailing shipbuilder.

STX, the de facto holding company of STX Group, is mostly likely headed for court management. The company provided payment guarantee to the United Kingdom-based BP Shipping in late 2012 on STX Offshore & Shipbuilding’s tanker construction. STX Offshore & Shipbuilding still has to build 10 tankers out of 14 fleets that it agreed to construct for the global shipping company at 750 billion won ($632 million), which is considered much lower than 1 trillion won that the shipbuilder should have asked for in order to generate profit, according to a shipbuilding industry official who asked to be unnamed. STX’s guarantee amount on the remaining 10 tankers reportedly is about 500 billion won.

Creditors, however, is mulling over maintaining their life support for STX Engine as only about 5 percent of its total sales hinge on the shipbuilder. The engine builder is gaining steady income from military engine and electronic communication equipment sectors. The plan to merge STX Engine and STX Offshore & Shipbuilding is one another option, sources said.

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