France Seeks Multiple Owners for STX Yard

Cruise ship under construction at Saint-Nazaire (courtesy Royal Caribbean)

By MarEx 2017-01-10 17:52:02

In a press conference Tuesday with Italian Prime Minister Paolo Gentiloni, French President Francois Hollande said that his administration would like to see "a multiple shareholder solution" to the sale of STX France, one of the world's largest naval yards and a leading builder of cruise ships. Hollande may have been alluding to the sale of a minority stake to government-owned naval defense contractor DCNS, which recently said that it is very likely to take an equity position in the yard. 

STX France has built some of the largest vessels in the world, and it is the only French yard capable of building aircraft carriers, which makes its ownership a matter of strategic concern for the French military. The French government holds a 33 percent stake and has the right to block the sale of the majority share. The remaining 66 percent of STX France is up for auction as part of the bankruptcy proceedings for STX Offshore and Shipbuilding, and the Korean court overseeing the disposal of STX’s assets has named Italian shipbuilder Fincantieri as the preferred bidder. 

Hollande clarified on Tuesday that his government wants to remain a minority shareholder with blocking rights, and that it does not intend to nationalize STX France. His minister of industry, Christophe Sirugue, has emphasized that while nationalization might appear attractive, the yard should remain a privately owned entity in order to maintain relationships with private clients. 

The Korean bankruptcy proceedings also include the spin-off and sale of STX subsidiary Goseong Offshore & Shipbuilding, a mid-sized builder of hull sections for other yards. So far, Goseong has not attracted a qualified bidder, and the court intends to hold another auction in early 2017. Unlike STX France, Goseong has not been profitable of late: it lost $11 million on sales of $200 million last year, but the court believes that its value as a going concern exceeds the value of its assets in liquidation.