Daedong Shipbuilding is reborn with STX help

STX Corporation has expanded into the shipbuilding business with an equity injection of $77 million into Daedong Shipbuilding. STX, formerly called Ssangyong Heavy Industries, is a licensed builder of MAN B&W, SEMT Pielstick, Niigata Engineering and Hanshin Diesel marine engines. Daedong Shipbuilding had been under court management since 1997. During this time it has undergone a major restructuring programme. It now boasts an orderbook totalling around 33 vessels, representing a two-year workload. The government had pushed for a new owner to take over the management of South Korea?s seventh largest yard since early this year. In August it appointed accountants KPMG to handle the bids, which also included a submission from Hanjin Heavy Industries. Yonhap News Agency reported that STX now has a 98% stake, although the new controlling shareholder still had to finalise negotiations with creditors to buy out the restructured debt. The report said STX would hold consultations with Daedong?s creditors on its plan to dispose of the financially troubled shipbuilder?s accumulated debts through the issuance of new debentures carrying stock right. STX claimed in the report it could boost Daedong?s annual sales by more than 100 billion won ($76m) by supplying it with diesel engines and other shipbuilding components, in addition to deriving benefits from the synergy effect. Daedong?s Chinhae dock measures 320m x 74m. Although it provides for the construction of vessels up to 250,000 dwt, the present building arrangements are geared mainly towards simultaneous production of Panamax tankers and bulkers, using both the parallel and tandem building methods. Last year it received its first contract for container ships with an order for three 2,500 TEU vessels from Greek owner EF Shipping. This year has seen the company deliver several newbuildings, including three 52,000 dwt bulk carriers to Turkish-owner Geden (Genel Denizcilik Nakliyati). The first vessel was named Baytur followed by Tarsus and Namrun. This trio of bulkers measures 190m in length, 32.25m in width, a depth of 17.70m and service speed at 14.5knots. Also delivered was a 35,000 dwt product/chemical tanker for Stelmar Shipping of Greece. The original Daedong yard at Busan dates back to 1962, but in the mid 1990s the owners joined the South Korean dash for expansion and built a new VLCC-sized dock at Chinhae which was completed in 1996. The estimated $230 million investment however, proved too much for the owners, Hanbo and Seyang Shipping. They were declared bankrupt barely seven months after laying down the first vessel at Chinhae. Soosan stepped in in early 1997, but it too succumbed to the maelstrom of Korea?s financial crisis in late 1997.