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STX Group may face another liquidity crisis

STX Offshore & Shipbuilding’s request for help to creditors indicates that STX Group may be facing another liquidity crisis, analysts said on Wednesday.

They said the future of STX Group, the nation’s 13th-largest conglomerate in terms of revenue, is seemingly murky as it faces a series of credit downgrades, following the self-restructuring plan proposed by the shipbuilding unit, its core affiliate, to its creditors on Tuesday.

STX Offshore, the world’s fourth-largest shipbuilder, asked creditors for debt reprieve to roll over maturing debts by one year to get additional loans to build ships.

In response to the sudden move of STX Group’s flagship unit, which is responsible for more than 50 percent of the group’s total revenue, Korea Ratings, a local credit rating agency, downgraded bonds of four affiliates of STX Group ― STX Offshore, STX Corp, STX Pan Ocean and STX Heavy Industries ― by one notch from BBB+ to BBB- on Wednesday. Industry watchers predicted that other local and international agencies will follow suit soon.

“Credit downgrades will put a bigger burden on the financially struggling STX Group, and it is highly likely that the group will face a liquidity crisis again,’’ said a stock analyst from Woori Investment and Securities.

The group went through a liquidity crisis last year and injected funds to pay debt by selling assets, including its entire stakes in STX OSV and STX Energy.

The group, however, stopped short of improving its financial situation this year as it failed to sell STX Pan Ocean, the shipping arm of the group, in March, while sales of STX Offshore and Shipbuilding have made little progress due to falling global ship orders.

Industry watchers expected that it may be difficult for STX Offshore to show better performance this year over last year. The company posted a loss of 698.6 billion won ($625 million) in operating profits last year.

Based on the grim outlook for STX Offshore, shares of STX group’s affiliates plunged for the two consecutive days. Shares of STX Offshore nosedived 14.9 percent to 4,390 won on Wednesday. STX Corp. dropped 10 percent to 4,790 won.

Meanwhile, KDB Bank-led creditor group of STX Offshore started reviewing the self-rescue plan proposed by STX Offshore to decide within this week if the group offer financial lifeline to the company.

By Seo Jee-yeon  (jyseo@heraldcorp.com)
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