STX Offshore to get 1.8t won rescue funds

[SEOUL] Creditors of South Korea's STX Offshore & Shipbuilding Co have decided to lend the debt-laden shipbuilder an extra 1.8 trillion won (S$2.1 billion), two creditor sources with direct knowledge of the matter said.

The fresh funds are being made available after a new round of due diligence uncovered loss-making orders that STX Offshore took on to avoid a short-term liquidity squeeze, one person familiar with the matter said.

Under terms of the new loan, the extra money is to be paid back before other debt when STX Offshore has funds available, the person said. Main creditor Korea Development Bank (KDB) and other banks had already agreed to inject about 2.7 trillion won into STX Offshore last year.

STX Offshore is part of a batch of affiliates of the shipping conglomerate STX Group, like holding company STX Corp, that applied for creditor rescue last year after being hit by falling ship prices since the global financial crisis.

Many of the loss-making orders reviewed in the latest round of due diligence have since been cancelled or renegotiated, one source said. The people familiar with the matter were not authorised to speak to media.

Despite creditors' rescue attempts, STX Offshore is expected to be delisted after March as its debt outweighed capital by 1.4 trillion won as at the third quarter last year. Trading in the stock has been halted since earlier this month.

Due diligence is now complete. The chief executive of KDB, Hong Kyttaek, said last week that the process of selling some STX assets is expected to move to the next stage as early as next month. Credit Suisse is advising on the sale of two remaining European units of STX Offshore.

The Finnish government bought a majority stake in ice-breaking technology company Aker Arctic for nine million euros from STX Finland in December.

South Korea's largest bulk shipper, Pan Ocean, is expected to be put on the block this year as its operations are normalising quickly, Mr Hong said. It was spun off from STX Group in December while in court receivership. - Reuters