Kang Duk-soo, 63, chairman and founder of the faltering STX Group, is likely to step down within this month due to conflict with creditors.
Representing creditor banks, Korea Development Bank issued a statement on Tuesday calling on him to resign to save the group. The request was made based on the earlier agreement of Kang in April, a pre-condition for capital injection to ailing STX Offshore & Shipbuilding, a core affiliate of the group.
Under the agreement, Kang promised not to raise objections to creditors’ decision when they reshape the management.
The creditors’ move to sack the STX Group founder appears determined as a KDB official mentioned the name of the next top management candidate ― Park Dong-hyuk, a vice president at rival Daewoo Shipbuilding & Marine Engineering.
The nation’s fourth-largest shipbuilder resisted the creditors’ move, issuing a counter-statement. The company accused creditors of “abuse of power,” saying that the agreement is traditionally non-binding. Chairman Kang allegedly appeared at his office and did business as usual on Wednesday.
Despite the opposition within the group, industry watchers predict Kang will yield to creditors’ request to restore the group before an interim shareholders’ meeting slated for Sept. 27. Regardless of Kang’s decision, KDB said it will convene a board meeting next Monday and discuss the appointment of a new head.
Since April, creditors and chairman Kang have reportedly clashed over a few issues, including human capital restructuring, in the course of restructuring STX Offshore & Shipbuilding. The group is waiting for fresh liquidity of about 2.15 trillion won ($1.96 billion), from creditors, which would see the total liquidity injection reach nearly 3 trillion won. A debt-to-equity swap worth 700 billion won and capital reduction are also planned.
The fall of Kang represents the demise of an icon ordinary Koreans. Salary worker-turned-business group chairman Kang has been an icon of self-made business success in Korea where family controlled-conglomerates, or chaebol, are dominant.
In 2001, Kang, who served Ssangyong Heavy Industries as the chief financial official, took over the company by leveraging his personal wealth worth 2 billon won ($1.8 million) and renamed the company STX Group. He transformed the company into a shipbuilding and shipping giant by sealing several inbound and outbound merger and acquisition deals in the mid-2000s.
By Seo Jee-yeon (firstname.lastname@example.org