The South Korean government holds a meeting next month in order to discuss a merger between Sungdong Shipbuilding & Marine Engineering and STX Offshore & Shipbuilding.
KDB has poured 4.5 trillion won (US$4.0 billion) so far into STX, which adopted a voluntary restructuring agreement in April 2013. Nevertheless, STX went into receivership in June last year due to the lack of work and profitability. Although the receivership ended earlier than scheduled last month, the creditors are quite pessimistic about the future of STX. According to KDB, the shipbuilder’s overhead costs overwhelm those of the others in the industry to the point of significantly limiting profits from new contracts.
Sungdong signed a voluntary restructuring agreement with the Export-Import Bank of Korea in April 2010 and more than four trillion won (US$3.6 billion) has been injected into the shipbuilder since then. Things are not getting better though for the same reasons as STX. Its backlog is likely to run out late this year.
The Original Posted by Jung Min-hee/Business Korea