Troubled Korean yard group STX plans to sell its yards in France, Finland and Dalian in China to help the group out of its debt crisis.

The yards in France and Finland are major cruise ship builders. The STX Turku yard in Finland has only just agreed additional fi nance with the Finnish government to continue work on a cruise ship construction project (New Ships 19/2013). STX Group Chairman Mr Kang Duk-soo is facing a major crisis as the Korea’s 13th largest conglomerate is close to collapse due to an acute cash shortage caused by the prolonged downturn in the shipbuilding industry. The chairman has decided to sell all of the group’s major overseas assets to help solve cash fl ow problems. Also, he has decided to hand over his controlling shareholdings in STX Offshore & Shipbuilding, the key shipbuilding section of the group, to group creditors. “We will keep our three crucial affi liates STX Heavy, STX Engine and STX Offshore and shipbuilding,” a group spokesman said. “The group plans to sell its shares in its overseas affi liates including our shipyards in France, Finland and Dalian in China.” The restructuring is aimed at realigning the STX group’s businesses to save the group by focusing on its main businesses.

Kang’s decision to withdraw from the Dalian shipbuilding venture shows the group’s sense of urgency as the shipyard was one of its crucial overseas assets. The spokesman said that Dalian local government has dispatched an auditing team to value the yard. Since 2007, STX has invested over US$1.5 billion in the Chinese shipyard, among the world’s largest in terms of shipbuilding capacity. Some 21,000 people worked there during its peak period of operations. “There is no option but to sell the Dalian shipyard, and STX hopes to raise as much as 1 trillion won (US$907 million) and this is a scenario that we had not been expecting,’’ an STX official said. The Dalian city government is seeking to have the China State Shipbuilding Corp (CSSC) manage the shipyard until a new owner is found. STX failed to meet a repayment schedule for bank loans amounting to some US$647 million which is intensifying its problems.

Despite STX Dalian’s huge liabilities, the local government is willing to take control of the Chinese yard due to its large Chinese workforce and because the loans are from Chinese banks. STX chairman Kang has seen remarkable success over the last decade, turning the group into one of the top conglomerates through a series of successful mergers and acquisitions. He took over a failing Korean ship engine maker, Ssangyong Heavy Industries, and turned it into the STX conglomerate with US$23 billion in assets in just 11 years. But his group was hit hard by the 2008 global financial crisis and it has since been suffering from reduced demand for marine transport and the cancellation of some shipbuilding orders. Kang handed over his stakes in STX Offshore to creditors and banking sources said the chairman will give up his management rights to save the conglomerate.