It has been reported that Chinese creditors such as the Industrial and Commercial Bank of China is asking Korea to clear the overdue wage claims for Chinese employees, as well as hand over the prior liens currently held by Korean creditors to them. In addition, they unreasonably made requests for Korea to stand surety for their new capital supports.
Domestic creditors such as the Korea Development Bank have turned down these requests made by China, which seem to be ways for tricking Korean banks into STX Dalian normalization. The Chinese requests are very unreasonable, seeing from that Korean banks’ exposure to STX Dalian is only 10%.
It seems the negotiations between Korean and Chinese creditors will face a high level of difficulty, with the Chinese creditors making such unreasonable requests from the beginning. In fact, STX restructuring may even lead to governmental conflict between the two countries.
According to the financial industry and China on September 15, in order to normalize STX, its Chinese creditors such as the Industrial and Commercial Bank of China have asked the Korean creditors for the following: to clear the overdue wage claims for Chinese employees, to stand surety for new fund support, and to give prior liens to China. Although China has continuously asked for Korean creditors to share the burden of STX normalization, this is the first time such specific requests were made. Prior to this, Korean creditors such as the Korea Development Bank and Nong Hyup visited STX Dalian under China’s urgent request.
Chinese creditors asked the STX Group to clear the overdue wage claims for Chinese employees in order to normalize STX Dalian. In March, STX Dalian stopped operation and over 20K Chinese employees have not been paid. China is requesting STX to solve the problems it created by making all the overdue payments first to normalize STX Dalian, which really means for the Korean creditors to take the burden.
Chinese creditors announced they will consider investing new funds if STX stands surety for STX Dalian. They also requested Korean creditors to hand over the prior liens for STX Dalian to China.
Korean creditors agree that the requests made by Chinese creditors are mostly unreasonable and hard to accept, especially because the exposure of domestic banks to STX Dalian is only 12.5% of the total. In fact, clearing the wage claims when the creditors are considering STX Dalian liquidation is practically a new fund support.