STX O&S Gets Refund Guarantees for Newbuilds in Exchange for Further Cuts
STX Offshore and Shipbuilding’s main creditor, Korea Development Bank (KDB), has issued refund guarantees for eight newbuilding orders the troubled shipbuilder secured earlier this year.
The said guarantees relate to two 50,000 dwt product tankers ordered by a Greek owner Oceangold Tankers, two 11,200-DWT tankers ordered by Woolim Shipping Co. and four 50,000 dwt product tankers ordered by Pantheon Tankers, local media informed.
The move will give some breathing space for the struggling yard as it was facing a risk of losing the shipbuilding orders unless it provided the said refund guarantees should it encounter difficulties in completing the orders.
KDB said the guarantees will be provided in exchange for the completion of the company’s restructuring which needs to include a 30 percent cut in fixed costs, the Korean Pulse reported.
As a result, the shipbuilder has proposed a voluntary retirement scheme for its employees that is open as of November 26 until December 11.
In 2013 STX employed over 3,400 personnel, which have now been reduced to 1,400 people and is expected to be reduced even further to below 1,000 workers amid cost-cutting measures.
Additional measures such as unpaid leave and salary cuts are also being considered if the proposed voluntary retirement doesn’t meet the required 30 percent cost cut prerequisite.
In July, the shipbuilder obtained an early release from court receivership from the Seoul Bankruptcy Court amid considerable progress in its economic recovery.
Hence, STX Offshore and Shipbuilding was allowed to pursue business normalization under its creditor banks’ guidance.
Nevertheless, the path to financial recovery of South Korean shipbuilder was hindered following a fatal blast at the company’s Changwon yard in August that killed four workers, as STX O&S was ordered to stop work.
World Maritime News Staff