Creditors Seeking to Sell off Hanjin, STX and Dae Sun
Medium-sized shipbuilders under creditor-led restructuring processes are put up for sale. They include Hanjin Heavy Industries & Construction, STX Offshore & Shipbuilding and Dae Sun Shipbuilding and Engineering. However, it remains to be seen whether these shipbuilders can be sold within the year in light of the sluggish shipbuilding industry.
Korea Development Bank (KDB), the main creditor of STX Offshore & Shipbuilding, has selected EY Han Young as the lead manager in the sale of the shipbuilder and is expected to announce its sale soon.
A preliminary tender for the sale of Hanjin Heavy Industries closed on Oct. 26. The tender is to sell a 63.44 percent stake held by its creditors, including KDB, and a 20.01 percent stake held by a Philippine financial institution. The main creditor, the Export-Import Bank of Korea, is currently reviewing the bids.
Early this year, Sungdong Shipbuilding was sold to a consortium led by HSG Heavy Industries.
These four shipbuilders, together with Daehan Shipbuilding & Marine Engineering, constitute the nation's top five medium-sized shipbuilders that specialize in building 10,000-DWT commercial vessels more than 100 meters long. Daehan Shipbuilding & Marine Engineering is a subsidiary of Daewoo Shipbuilding & Marine Engineering, which is in the process of being acquired by Hyundai Heavy Industries Group.
Now the remaining issue is whether they will be able to find their new owners and continue to engage in the shipbuilding business. For now, each creditor group sees 2020 as the right time to sell off their shipbuilders as they have normalized the operations of the troubled shipbuilders through restructurings. Hanjin Heavy Industries is a case in point. The company posted 306.1 billion won in net profit in 2019, breaking away from a long deficit. It recorded a surplus in 2020 as well.
However, some industry insiders point out that potential buyers are skeptical about the future of the shipbuilding industry. Orders won by mid-sized shipbuilders in the first half of 2020 plunged 44.5 percent from 2019, according to the Export-Import Bank of Korea's Overseas Economic Research Institute. In the second half of 2020, the decline is expected to worsen to 70.3 percent. Some observers say that even if the COVID-19 outbreak comes to an end, it will be difficult for Korean mid-sized shipbuilders to win competition with their Chinese rivals.