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South Korea Proceeding with Sale of STX as it Rescues Shipbuilders

STX South Korea sold to private investors
(file photo)

By The Maritime Executive 02-02-2021 06:48:45

South Korea’s efforts to stabilize its mid-sized shipbuilders has reportedly taken a step forward with a deal to rescue one of the one-time industry leaders, STX Offshore & Shipbuilding. Creditors led by the Korea Development Bank (KDB) invited bids for their shares in the yard and have reportedly completed the sale to private equity investors.

Korea’s Yonhap News Agency had reported last November that the creditors had selected a consortium comprising local private equity fund KH Investment and United Asset Management Company (UAMCO), South Korea's biggest bad debt investor, to take control of the troubled shipbuilder. The closing of the transaction was expected at the end of 2020 but had been delayed.

Once the world’s fourth-largest shipbuilding group, STX founded in 1967 had grown to include international operations including stakes in France’s famed Chantiers de l’Atlantique and taking over Aker Yards Oy in Finland which was the former Wartsila shipbuilding operation. 

In 2013, STX began its first debt restructuring effort that would last until 2017. The yard filed for court receivership in May 2016, but by mid-2017 made progress in its economic recovery plan managing to meet its debt payment schedule. KDB accepted in the spring of 2018 STX's next self-rescue plan withdrawing its plan to put the yard under court receivership. The company was significantly downsized as a result of the restructurings losing operations including the shipyards in France and Finland.

By the summer of 2020, STX’s workforce had shrunk to just 500 employees and the company reported that it had just seven ships in its order book. Workers were forced at times to accept unpaid leave prompting strikes at the yard.

The sale of STX is part of an overall effort to support the midsized shipbuilding operations in South Korea. In addition to STX, Hanjin Heavy Industries & Construction Co., and Daesun Shipbuilding Engineering Co. were also put up for sale. Yonhap reported that the creditors of Daesun Shipbuilding Engineering completed the deal to sell the shipbuilder to Dongil Steel Co. while the creditors of Hanjin Heavy Industries selected a consortium led by construction company Dongbu Corp. as its preferred bidder.

The reorganization of the shipbuilding industry in South Korea has not been limited to the midsized yards. Hyundai Heavy Industries, the parent company of Korea Shipbuilding & Offshore Engineering is awaiting regulatory approval for its proposed acquisition of Daewoo Shipbuilding & Marine Engineering (DSME).The deal, which would unite two of Korea’s largest shipbuilders and four shipyards, was proposed as a means of strengthening the companies and improving their competitive position with China’s shipbuilding industry.