STX, Tongyang Group selling core units
By Lee Hyo-sik
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Kang Duk-soo STX Group Chairman
Hyun Jae-hyun Tongyang Group Chairman
STX and Tongyang Group are selling core businesses to secure cash.
They are being spurred on by the example of Woonjing, which went bankrupt after delaying restructuring.
STX has been struggling with a liquidity shortage and said Thursday that it will sell its 35.19 percent stake in core affiliate STX Pan Ocean, Korea’s largest bulk ship operator.
In 2008, Pan Ocean made an operating profit of 670 billion won ($620 million). But following the collapse of the Lehman Brothers and the consequent global economic downturn in 2009, the international shipping industry has fallen into a deep slump as a result of sluggish industrial activity.
Over 80 percent of STX Pan Ocean fleet is composed of bulk carriers that transport iron ore, coal and other raw materials.
However, some STX executives oppose the sale, saying the shipping company will rebound. Chairman Kang Duk-soo decided to unload it to focus more on shipbuilding, energy and other areas.
``We have been making all-out efforts to enhance our financial health through the sale of our affiliates since we signed a financial restructuring accord with the Korea Development Bank,’’ an STX Group spokesman said.
``We have begun talking to investors both at home and abroad that are interested in taking over our shipping unit,'' he said.
Earlier this year, the group sold a 43.1 percent stake in STX Energy to Japanese financial firm Orix for 360 billion won.
``We are also close to disposing of European shipbuilding subsidiary STX OSV. Once the ongoing corporate restructuring is completed, STX will focus on shipbuilding, marine plants and the energy sector,’’ the spokesman said.
Tongyang Group, a mid-tier conglomerate specializing in construction materials and household appliances, is also trying to sell its flagship units to secure cash to ride out the current liquidity shortage.
The group, headed by Chairman Hyun Jae-hyun, recently decided to dispose of Tongyang Construction Materials and Tongyang Magic, which posted respective operating earnings of 40 billion and 14 billion won from January to September this year.
``They are our current cash cows. But if their future is not bright, we should give them up and instead put our priority on other sectors,’’ a Tongyang Group representative said. ``We will improve our financial health with the funds generated from the sale. We will make more investments to enhance our cement and energy businesses.’’
The group plans to complete the ongoing restructuring by the end of 2013.
POSCO, the world’s fourth largest steel maker, has also been active in selling non-essential affiliates to secure cash amid the ongoing global steel industry slump. Among others, it is trying to sell three retail properties owned by affiliates at home and abroad.
Dongkuk Steel, the country’s third largest steelmaker, recently shut down a plant in Pohang, North Gyeongsang Province, that produced thick steel plates used to build ships, bridges and other large structures.
The firm is now seeking to sell the production facility to a steel maker in Southeast Asia.