STX’s Chinese Shipyard Sold Decade After its Financial Collapse
Nearly eight years after all work stopped at the Dalian shipyard, one of the last pieces in the long-running bankruptcy of STX has been sold. Chinese officials reported that they completed the auction of the remaining assets of STX Dalian Shipbuilding, which had been the largest foreign investment in the Chinese shipbuilding industry.
Hengli Heavy Industry Group Co., a subsidiary of Hengli Group, was the successful bidder for the shipyard with reports indicating that they paid $257 million for the assets. Hengli is said to be the second-largest private enterprise in China with diversified interests including large operations in the refining and chemical industries. The company is reported to have shipbuilding and marine heavy tool manufacturing interests but it was unclear if they planned to open a commercial shipyard on the site at Changxing Island. Chinese media reports said the company plans to establish a “high-end port equipment manufacturing base.”
The STX shipyard opened in 2006 and was widely promoted as part of the industrial development of Changxing and Dalian. At its peak, it employed 30,000 people before beginning to experience financial troubles in 2012. The downturn in the global shipbuilding industry led to financial problems for all of the South Korean company’s operations and by 2013 there were reports that the company was exploring the sale of assets possibly in Finland, France, and China. Chinese tried to raise additional capital for the Dalian shipyard.
Bankruptcy proceedings for the Dalian shipyard were initiated in 2014, a year before STX collapsed. The Chinese yard sought court permission to restructure and reorganize, laying off 10,000 people while losing several shipbuilding orders. In March 2015, however, the yard was declared bankrupt with reports saying China was selling off the company in pieces. The company was said to have debt of $3.2 billion.
Dalian Shipbuilding Industry Company was interested in acquiring the main shipyard facility but the deal was blocked by its parent company. After that, China attempted to auction off the STX Dalian facility with as many as 10 auctions failing to find a buyer for the facility. The shipyard has remained idle since 2015.
The sale of the shipyard in China comes a year after South Korea's state-owned bank completed the sale of the company's South Korean operations. Two South Korean investment firms acquired the company for just over $200 million and relaunched the shipyard as K Shipbuilding. The company's other assets, including the yards in France and Finland, had been sold several years earlier. At its peak, STX, which was started in 1967, had been the world's fourth largest shipbuilder and the first to have an extensive network of yards ranging from Europe to Asia.