Investors Complete Purchase of STX Renaming Yard K Shipbuilding
The sale of South Korea’s financially troubled STX Offshore & Shipbuilding Company was completed today after eight years of financial oversight by creditors. In celebrations scheduled for tomorrow and lasting for the next two weeks in the hometown of the company’s shipyard, they will mark the competition of the transaction officially rebranding the operation K Shipbuilding.
The state-owned Korea Development Bank had been the lead creditor of the company overseeing the financial operations. Once one of the largest shipbuilders in the world, STX launched its first debt restructuring effort in 2013, but six years ago the company was forced to file for court receivership. In 2018, KDB again proposed court receivership, but later accepted a self-rescue plan from STX.
KDB had begun exploring the sale of STX last year as part of an effort to strengthen South Korea’s smaller shipyards. A consortium comprising local private equity fund KH Investment and South Korea's biggest bad debt investor, United Asset Management Company (UAMCO), emerged as the leaders in the process to sell STX. KDB confirmed the end of creditor management with Korean media reports stating the deal was completed at a value of just over $217 million.
The new K Shipbuilding is only a small portion of the operation STX had built before its restructuring and asset sales began. STX employed 1,500 people in Korea in 2017, which had been reduced to just 500 people last year with international interest in countries including France and Finland sold years ago. Desperate to further lower costs, the yard had been placing workers on unpaid leave, which led to a strike in the spring of 2020 and all work stopping briefly in June 2020.
The revitalization of the operation began just over a month ago when STX announced it had received a series of orders that will effectively double the yard’s orderbook and provide two years of additional work. STX reported a total of 12 orders for tankers bringing the yard’s orderbook to a total of 28 vessels with an option for two additional oil tankers. In the summer of 2020, STX reported that its orderbook was down to just seven ships.
The contracts announced in June 2021 range between two 10,000-ton petrochemical carriers, six 50,000-ton chemical tankers, and four 115,000-ton oil tankers with an option for two additional vessels, STX said. Deliveries range between the fourth quarter of 2022 and the end of 2023. They did not identify the value of the contracts nor the shipowners. Rumors in the market indicate that the new K Shipbuilding is about to finalize orders for up to six additional product tankers.