STX Group has applied for joint management of its four financially distressed subsidiaries by creditor banks, the state-run Korea Development Bank said Friday.
The main creditor KDB also said STX Group is considering selling two units of STX Europe ― STX France and STX Finland ― as part of efforts to improve the group’s overall financial soundness.
The shipbuilding conglomerate’s application for creditors’ comanagement is seen as a desperate effort to overcome the financial crisis facing STX Heavy Industries, STX Engine, STX Corp. and ForceTec, analysts said.
STX Corp. is the holding company of STX Group, the nation’s 13th-largest conglomerate by assets. ForceTec, whose main creditor is Woori Bank, is the group’s unit dealing with IT and management of subcontractors.
Should creditors including the KDB accept the request, they will set aside bailout funds to prevent the four companies with liquidity problems from falling into insolvency.
“Creditor banks are scheduled to hold a meeting to discuss their measures next Monday,” a KDB executive said. “STX will also be under due diligence by creditors until early June.”
In addition, in its regulatory filing later in the day, STX Group said it had internally discussed possible disposal of STX France and STX Finland, adding that “nothing has yet to be decided.” The shipbuilding conglomerate is also known to be seeking to sell STX Dalian Shipbuilding, the group’s unit in China.
STX Group chairman Kang Duck-soo recently handed over his controlling stakes in STX Offshore & Shipbuilding, a core affiliate of STX Group, to creditors.
At the end of 2012, STX Group posted 18.8 trillion won ($17 billion) in sales but its debt snowballed to 17.9 trillion won, according to the Fair Trade Commission.
In a similar move, the business group’s flagship unit STX Offshore & Shipbuilding asked creditors in April to roll over maturing debts by one year to get additional loans to build ships.
In response to the sudden move by STX Offshore, which is responsible for more than 50 percent of the group’s total revenue, Korea Ratings downgraded bonds of four subsidiaries of STX Group ― STX Offshore, STX Corp., STX Pan Ocean and STX Heavy Industries ― by one notch from “BBB+” to “BBB-.”
An Woori Investment & Securities analyst said that credit downgrades will put a bigger burden on the financially struggling STX Group, and it is highly likely that the conglomerate would face a liquidity crisis again.
It went through a liquidity crisis last year and injected funds to pay off debt by selling assets, including its entire stakes in STX OSV and STX Energy.
The conglomerate has been hit hard by the global shipbuilding industry’s long slump caused by the global economic slowdown and eurozone debt problems.
By Kim Yon-se (
kys@heraldcorp.com)
