KDB gives second chance to STX

An STX Offshore & Shipbuilding worker enters the company's headquarters in Changwon, South Gyeongsang Province, Tuesday. / Yonhap

By Park Jae-hyuk

The Korea Development Bank (KDB) has decided to examine STX Offshore & Shipbuilding's self-rescue plan this week, allowing the debt-ridden shipbuilder a second chance to avoid court receivership, industry officials said Tuesday.

The decision came after the belated agreement of STX management and labor on the self-rescue measures, including unpaid leave and a pay cut, to reduce the payroll.

After the shipbuilder's failure to submit its self-rescue plan by midnight Monday, the KDB-led creditors said they would place the company under court receivership “in principle.”

Given the procedure takes a week at least, the KDB said it may withdraw the decision if STX comes up with a satisfactory self-rescue plan.

Unlike Kumho Tire, which was acquired recently by the Chinese-based Doublestar Tire, STX has reportedly enough money to avoid bankruptcy over the liquidity crisis.

It secured 147.5 billion won ($138.6 million) as of February, according to industry officials.

STX promised to submit the self-rescue plan by Tuesday afternoon, after getting approval from the union. The labor union held several meetings to persuade members.

In March, the government urged STX to implement additional restructuring, including reducing its payroll to cut fixed costs by 40 percent.

The management tried to convince the labor union to follow the measure, saying it was inevitable, but the union resisted. This led the company to miss the deadline for the self-rescue plan.

STX Offshore, once the world's fourth-biggest shipbuilder by orders, was placed under court receivership in 2016 and graduated from the program last July.

Korean shipbuilders have suffered from declining orders amid a global economic slowdown after the 2008 financial crisis.