STX keeps inking contracts

STX Group said Thursday it had received a $120 million order to build two LPG carriers and two oil tankers, and is engaging in last-minute talks over another giant deal worth $430 million.
The deals are expected to give STX an impetus in recovering its financial health. The announcement came amid escalating worries about an alleged credit crunch at the group.
Last week, the country’s 14th largest conglomerate unveiled a set of plans to secure 2.5 trillion won ($2.18 billion) in cash or cash equivalents to salvage its weakening financial health caused by a prolonged slowdown in its key business sectors of shipbuilding and marine engineering.
The group said the successful deal on two LPG carriers was signed early this week in Athens, Greek. Under the contract, STX will build two 6,500-CBM LPG vessels in Busan, Korea’s largest port city, and deliver them to the Greek owner by the second quarter of 2014.
Last week, STX signed another deal of making two 50,000-DWT oil tankers, which are contracted to be made in Jinhae and delivered by the second quarter of 2013.
The company added it had signed a letter of intent (LOI) with a domestic client to make two LPG carriers and is engaging in last-minute talks with a Middle East client over a vessel carrying liquefied ethylene. The two deals in the making are valued about $430 million, it said.
“The ongoing negotiations are very likely to be successful,” a STX official said.
According to Clarksons, a leading shipping industry information provider, global demand for high-end vessels, particularly LPG carriers and medium-sized oil tankers, rapidly increased from early this year.
STX is proven to be competitive in this segment and this trend will help facilitate the firm’s escape from financial trouble, analysts said. As of late April, STX won contracts worth $2.2 billion, 6.8 percent of its target sales of $15 billion for this year.
Analysts and market insiders say STX should try harder to strengthen its position in the growing high-end ship market to avoid a recurrence of its current financial ordeal.
“STX has both the capability and experience to make high-end ships. But the problem is that it has lower market recognition than its rivals with the same level of capability and experience,” an analyst said.
Earlier, STX said it would raise funds by selling money-making affiliate STX OSV, stakes in unlisted affiliates and shares in natural resource development projects overseas. It will soon announce a preferred bidder for STX OSV, the world’s leading offshore plant and specialized vessel builder.
A consortium of Italy’s state-run shipbuilder Fincantieri and U.S.-based private equity company Carlyle, and Singapore-based shipbuilder Keppel are considered potential buyers.
Source: Korea Times