The head of South Korea's troubled STX Offshore & Shipbuilding warned of a tough road ahead after the firm avoided bankruptcy and was put under a court-led restructuring plan. The ailing company - once the country's number four shipbuilder - has struggled for years amid mounting losses stemming from mismanagement and a slump in global demand.
The firm last month requested a court-led restructuring after its creditor banks refused to offer further financial help, pushing it to the brink of bankruptcy. A Seoul court on Tuesday granted the request, meaning it would supervise the firm's management and reschedule debt payments to prevent it from going bankrupt. "It is regrettable that we have been put under court receivership but it is also fortunate at the same time that we avoided the worst-case situation," STX CEO Lee Byung-Mo said in a message to employees. "Steps for recovery will be a tough road and all employees will have to share the pain...but let's try to overcome this crisis wisely," he said in the message seen by the AFP Thursday. Under the receivership plan, Lee has to draft a restructuring plan by early September under court supervision. The firm currently faces outstanding debts worth 300 billion won ($258.3 million). The company - part of the STX Group that has businesses from shipping to construction - has several assets in Europe including shipyards in France. Creditor banks since 2013 have provided more than 4 trillion won to help STX repay maturing bonds but failed to turn the ailing shipbuilder around. The company - under creditor banks' supervision since 2013 - posted a net loss of 300 billion won last year.
South Korean shipbuilders including STX and Daewoo Shipbuilding and Marine have struggled with mounting losses as global demand slows and competition from China intensifies. South Korean government and creditor banks - including state-run Korea Development Bank - in recent months have urged intense restructuring efforts including mass job cuts. jhw/tm.