Court receivership looms larger over STX Offshore & Shipbuilding

According to the sources, the creditors, led by the state-run Korea Development Bank, will discuss later in the day whether to extend a lifeline to the financially troubled shipbuilder. But the sources said the creditors have already reached a consensus to place the shipyard under court receivership.

STX Shipbuilding, once the country's No. 4 shipbuilder, has been under the control of its creditors since April 2013, in line with a protracted slump in the shipbuilding sector.

STX Shipbuilding was affiliated with the now-defunct STX Group that had a business portfolio that ranged from construction and shipping to shipbuilding and energy.

The creditors had provided over 4 trillion won ($3.36 billion) to the shipyard, but it is still reeling from losses.

Last year, the shipyard logged an operating loss of 314 billion won following a loss of 1.5 trillion won the previous year.

Its debt owed to financial institutions reached 6 trillion won.

Creditors extended additional aid of 450 billion won to the shipyard late last year and sought to reorganize STX Shipbuilding's business portfolio to focus on tanker ships and small-sized LNG carriers.

Local shipyards have been suffering massive losses due to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump.

The country's top three shipyards -- Hyundai Heavy Industries, Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering -- suffered a combined operating loss of 8.5 trillion won last year, and a huge chunk of the loss, some 5.5 trillion won, came from Daewoo Shipbuilding.

Meanwhile, Financial Services Commission Chairman Yim Jong-yong said the government and creditors will push for a speedy restructuring of smaller shipyards in the country.

"We are looking at their situations and will take prompt actions (against smaller shipbuilders). Court receivership for STX will be determined in consideration of various factors," Yim told reporters after attending a meeting. (Yonhap)