STX bounces back with orders for six tankers

Local shipbuilder STX Offshore & Shipbuilding won contracts to build six tankers from Greece and local shippers, according to the company.

The good news comes within a month after STX came out of court receivership. On Friday, STX announced that Greek shipper Ocean Gold placed an order for four medium-range tankers of 50,000 DWT capacity. Two were order on an option contract, which gives the buyer a right to pay for the ship at a pre-determined price in case ship prices rise. The deal was worth $140 million in total.

STX said the ships will be constructed in its Jinhae shipyard in Changwon, South Gyeongsan, and delivered by the first quarter of 2019.

The day before, the shipbuilder announced orders for two 11,200 DWT tankers – one an option contract – that move oil and chemical products from a local company, Woolim Shipping. The company did not specify the value of the order. Shortage of orders plagued local shipbuilders over the last few years, leaving many of them in debt. STX, which became the world’s fourth largest shipbuilder by aggressive M&As in the 2000s, suffered like all its competitors.

To get orders, STX also signed contracts at very low prices.

Major expansion projects, including a major shipyard in China’s Dalian, had to be called off, leaving the company in massive debt. For recovery, it went through a major overhaul, cutting employees from 3,600 to 1,400 and selling a handful of properties. In June 2016 the shipbuilder went into court receivership for 14 months. It is currently managed by its main creditor, Korea Development Bank.

“With ship prices low, shipping companies are continuously contacting us for potential contracts unlike last year, so we’re expecting a few more orders to come this year,” said a company spokesman.

The company added that it has learned its lesson on low-price deals and said that the recent ones were reasonably priced based on profitability assessments by its creditors.
Source: Joongang