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STX Offshore & Shipbuilding files for court-led restructuring

STX Offshore & Shipbuilding files for court-led restructuring
Financially distressed STX Offshore & Shipbuilding has filed for a court-led restructuring scheme last Friday, local media reports said.

The Seoul Central District Court will next decide either to place STX under receivership or to liquidate the company.

The ailing STX has been under the control of its creditors since April 2013 and it has failed to stabilise its finances despite receiving over KRW4trn ($3.4bn) in financial aid from the creditors over the years, amid the protracted slump in the shipbuilding industry.

The creditors, led by Korea Development Bank (KDB), are not hopeful of seeing STX reviving its business, leading to last Friday’s decision to start a court-led restructuring.

STX was once the fourth largest shipbuilder in South Korea, behind the nation’s big three – Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering.

Lee Byung-mo, chief executive of STX, was quoted as saying that complacency and intense competition have brought about the crisis for his company and corporate peers such as the big three yards.

“The local shipbuilding industry grew too fast over a short period of time. Manpower was not sufficiently skilled and oversight was lax,” Lee told the Maeil Business Newspaper.

Lee advised that major yards should voluntarily cut capacity and companies need to end the unhealthy competition of luring new orders via below market prices, and instead learn to cooperate to develop new technologies as the venture is typically too costly for individual companies.