South Korea's fourth largest shipbuilder is reportedly filing for bankruptcy protection. The Wall Street Journal(WSJ) reported 20 October 2016 that a Texas court had granted STX Offshore and Shipbuilding Company a temporary restraining order to block creditors from seizing its US assets. The paper reported the company had filed chapter 15 bankruptcy papers with the same Texas court. STX executive Jang Yoon-keun, was quoted in court documents as saying the shipbuilder would “suffer irreparable harm" if US creditors were allowed to seize the company's assets. A favorable ruling would make the company immune to such actions. The company leadership is known to be planning to sell the company.
By May 2016 STX Offshore & Shipbuilding Co. had failed to come out of a state of complete capital impairment even after it used up 4.5 trillion won (US$3.8 billion) of funds received from the creditors in 2013. Accordingly, the creditors were highly likely to put the company under court receivership. The court receivership was interpreted to follow the financial authorities’ shipbuilding industry restructuring plan to save the nation’s top three shipbuilders and close down ailing small and mid-size shipbuilders. STX Shipbuilding went into a debt restructuring program with the creditors in 2013 due to its liquidity crunch. However, the company failed to be out of the state of capital impairment as its operating losses continued. The government and the KDB have eventually decided to abandon STX Shipbuilding after they had been “juggling bombs".
Once STX Shipbuilding is placed under court receivership, STX Group, which was founded by Chairman Kang Duk-soo, will be completely dissolved. In that case, STX subsidiaries which are barely keeping its head above water with the self-restructuring agreement, such as STX Heavy Industries and STX ForceTec, are highly likely to go belly up one after another.
The international industrial group STX, with approximately 39,000 employees, aimed to be a global top player in its core areas; shipping and trade, shipbuilding and machineries, plant and construction, and energy. STX Shipbuilding Co., Ltd. is a Korea-based company active in the shipbuilding industry. It focuses on designing and building ships with capacities ranging from 30,000 to 80,000 deadweight tons. The Company's product portfolio consists of tankers, container ships, bulk carriers, liquefied petroleum gas (LPG) and liquified natural gas (LNG) carriers, pure car carriers and naval vessels. Since 1962, with its outstanding shipbuilding technologies and world's best productivity, STX Shipbuilding Co., Ltd. has played a key role in the development of the shipbuilding industry. The company has the layout and capacity to build customized LNG Carrier, VLCC, and Large Container Ship and others. STX Shipbuilding is renowned and acknowledged for its extensive shipbuilding orders and high quality products in the world.
The company was founded in 1962 as Daehan Shipbuilding Ironworks. In 1967 the company was renamed Dongyang Shipbuilding Industrial Co., Ltd., and in 1973 is was renamed as Daedong Shipbuilding Co. Ltd. In 1973 it built Korea first container ship (G/T 2,000Ton class).
In December 2008 STX Shipbuilding held a ceremony in Jinhae Shipyard to celebrate successfully launching a 51,000 DWT class oil product tanker and a 2,700 TEU class containership that have been built in the dry dock for the 27th and 28th vessels, respectively. STX Shipbuilding has accomplished the highest productivity ever in the shipbuilding industry by developing 28 ships with (13 batches on one dock in a year) in 2008, which is attributed to the company's successful method of launching three ships simultaneously in one dock in March and November this year. The new shipbuilding method that make three ships launch simultaneously is the outcome of STX Shipbuilding's devotion to and dedication in enhancing the production and management technology, and of the further improvement of the existing method of launching two ships simultaneously. In other words, the new method maximizes the productivity and space availability by building five ships in a dock simultaneously and launching three ships successfully.
STX plans to get started its global business through the acquisition of Aker Yards and the completion of Dalian Shipyard in China, enhance its capability including securing its own technology, strengthening its ability to respond to the market conditions and expanding the chance to invest overseas, and create opportunities for seven sub-regions to do business on their own. Under the plans, it has established the strategies to jump into the reputable "Global Top Enterprise."
STX group has gone through the European Commission's in-depth antitrust investigation into its takeover the Norwegian shipbuilder Aker Yards, the world's largest cruise shipbuilder, effectively confirming its takeover of Aker Yards. The final approval allows STX to exercise its voting rights attached to its 39.2% stake in Aker Yards as the largest shareholder. STX group said on 06 May 2008 that they have been approved by the European Commission for the acquisition of the Aker Yards shares, after an in-depth antitrust investigation, launched in December 2007, into whether the transaction might allow STX to monopolize the cruise ship market. The European Commission concluded based on the decision from the antitrust probe that effective competition on the shipbuilding markets including the cruise shipbuilding would not be significantly impeded as a result of the proposed transaction, adding that it granted STX to exercise its voting rights attached to a 39.2% stake in Aker Yards to preserve its right as the largest shareholder. The EU's final decision has been long predicted since early last April that the commission would decide to allow STX to exercise its voting rights only at the special shareholder meeting. At the time, STX group successfully secured that the existing members of the Board remains as such by exercising the temporary voting rights, in defiance of the Havyard Invest AS, another shareholder, calling for a special shareholder meeting to propose to elect a new board of directors.
STX Europe ASA (former Aker Yards ASA) is an international shipbuilding group which aims to be the leading builder of cruise and offshore vessels. The group has a strong position in terms of developing state-of-the-art concepts, technology, processes and products for customers around the world. STX Europe ASA comprises 15 shipyards in Finland, France, Norway, Romania, Brazil and Vietnam, and is also a part owner of three yards in Germany and Ukraine. STX Europe had approx. 16,000 employees. Formerly known as Aker Yards ASA, the group changed its name to STX Europe in November 2008.
Despite unfavorable market conditions including high oil prices, resource scarcity and environmental problems, the group has set up the vision aimed at taking advantage of growing opportunities for doing business in resource-rich countries of the Middle East, Central Asia and Southeast Asia to accomplish its new goals.
Shipbuilding & machinery division set its 2012 goal of earning KRW 24 trillion in sales through leaping into the global top shipyard and engine maker. It plans to specialize in the ship portfolio based on three major production hubs of Korea, China and Europe, and enhance its competitiveness. It also presented its vision to win in the increasingly fiercer global competition through developing high value-added ships and specialized technology.
STX Pan Ocean playing a key role in shipping & trading division plans to record the turnover of KRW 14 trillion in 2012 and join the rank of world's top five shipping companies. While trying to sustain its competitive advantages in the dominant business of bulk carriers by expanding a fleet of ships, it plans to diversify its businesses, including LNG carriers, VLCC, PCTC and container carriers. In addition, STX Pan Ocean has decided to advance into relevant businesses including ports & combined logistics.
Plant & Construction division specialized in overseas construction markets and plant construction has established its 2012 business goal of the turnover of KRW 9 trillion. The division plans to expand its business portfolio including construction of residential complexes, development of overseas cities, and construction of maritime and industrial plants.
Energy division has decided to actively participate in developing resources overseas and the industry of new renewable energy. It has strategies for achieving the turnover of KRW 2 trillion through developing natural resources such as energy, minerals, grain, and water resources, and advancing into the industries of new renewable energy and power plants.
Having focused on 500-ton small frigate construction like Patrol Killer Guided missile (PKG), STX sought to achieve recognition of its frigate construction ability through building 2,500-3,000 ton frigate. Accordingly, the Korean builder could build a foundation to step up in special ship construction area, one of its strategies for early completion of autonomous agreement.
STX Offshore & Shipbuilding signed a shipbuilding contract for Ulsan-grade Batch-I Succeeding Ship (No. 6 Ship) that is a future frigate with the Defense Acquisition Program Administration on 27 September 2012. The shipbuilding project is about securing future frigates with enhanced combat capabilities and survivability through domestic shipbuilding and STX Offshore & Shipbuilding proved the capability of building such ships by receiving orders for No. 6 ship following No. 4 & 5 ships.
STX had a keel-laying ceremony of two next generation frigates (FFX-?), attended by officials from Defense Acquisition Program Administration and Defense Agency for Technology and Quality at its Jinhae Shipyard at 11am on 05 November 2013. The Korean builder was currently constructing a total of three next generation frigates, including the other one awarded in 2012.
Accordingly, the Korean builder could build a foundation to step up in special ship construction area, one of its strategies for early completion of autonomous agreement. STX expressed its determination, “Special ship area is taking a critical role in management stabilization of our company. Taking this next generation frigate construction as a stepping stone, we will establish a foothold for management normalization with kickstarting construction of large frigates like Aegis and exports of battleship from now on."
Join the GlobalSecurity.org mailing list