STX Group Chairman Kang Duck-soo is under mounting pressure to pay some of the debts held by the struggling units of the country’s 19th largest conglomerate using his own assets
May 17, 2013 Leave a comment
2013-05-16
STX boss pressured to give up private assets
By Na Jeong-ju
STX Group Chairman Kang Duck-soo is under mounting pressure to pay some of the debts held by the struggling units of the country’s 19th largest conglomerate using his own assets. Government officials and creditor banks say the 63-year-old executive should give up a considerable part of his fortune to take responsibility for the ongoing liquidity crisis in STX. “That’s a pre-condition for a financial lifeline. All creditor banks and the government want him to join their rescue efforts,” said an official from the Financial Supervisory Service (FSS). “They will take extreme measures, including requesting the court to seize his property, if needed.” Kang recently handed over his controlling stake in STX Offshore & Shipbuilding, which generates more than 50 percent of the group’s total revenue, to creditors. He is also considering selling the group’s overseas assets to secure cash. However, creditor banks claim that’s far from being enough to get STX out of its financial hole. Some bank officials told media Kang should pay the price for mismanaging the firm. They alleged that some of Kang’s relatives are working in key positions at STX affiliates, indicating he abused his status and power to give them jobs. In an email to STX employees last week, Kang said he will do whatever it takes to save the firm.
“I’m ready to give up all my shares in STX, if that’s necessary to resolve this crisis,” he said. “I’ll do my best to protect your jobs based on close cooperation with creditors and the government.”
STX officials say the main cause of liquidity problems is a long slump in the shipbuilding and construction industries, in which STX is heavily involved.
Early this week, creditor banks agreed to inject some 300 billion won ($270 million) to help the firm repay maturing debts and cover operating costs. They are also moving to provide an additional 190 billion won to STX Heavy Industries and STX Engine.
As of the end of March, creditors held the firm’s debts totaling 13.2 trillion won ($12.1 billion). The Korea Development Bank (KDB), the Export-Import Bank of Korea (Korea Eximbank), Nonghyup Bank and other creditors loaned a total of 5.2 trillion won to STX. They also provided payment guarantees worth 7.1 trillion won and were holding 771 billion won worth of corporate bonds issued by the firm.
The banks said they decided to rescue STX because a default could create ripple effects throughout the whole national economy.
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