STX Offshore & Shipbuilding Co.`s Jinhae shipyard.
The worst is not over for cash-strapped mid-sized Korean shipbuilder STX Offshore & Shipbuilding Co., saved from the brink of going insolvent in April as it makes little headway in asset sale or winning new orders, raising concerns about how long it can stay afloat on its own.
“We have troubles in keeping up the order flow due to the liquidity crunch caused by failures to sell assets,” said STX chief executive Jang Yoon-geun in a corporate newsletter on Wednesday. “I expect successful asset sales would help us draw new works.”
The shipbuilder avoided heading to a bankruptcy court in April after its largest shareholder and main creditor Korea Development Bank (KDB) accepted its self-rescue plan to cut fixed costs by 40 percent. It now has to fund for itself by selling idle properties.
The troubled shipyard planned to raise total 260 billion won ($232.3 million) through asset sales to cover the shipbuilding costs and pay for other corporate expenses. Although it has secured 110 billion won after disposing of STX Europe and its research and development center in Changwon, South Gyeongsang Province, it has been facing setbacks to sell other properties including floating dock, staff apartment, and idle sites near its Jinhae shipyard due to price disagreement.
STX has 15 vessels in its backlog, which will keep its dockyards busy until October 2019. “We are doing our best to find ways to sell the assets as planned to maintain the workflow by winning additional orders,” said an official from the company.
By Woo Je-yoon and Choi Mira
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]