STX Offshore & Shipbuilding Co., a midsize local shipyard, is likely to receive financial aid of 450 billion won (US$385 million) from its creditors soon, industry sources said Tuesday.
According to the sources, the creditors, led by the state-run Korea Development Bank (KDB), will decide this week on whether to salvage the shipbuilder from a liquidity shortage.
Local lenders’ exposure to STX Offshore & Shipbuilding stood at 4.29 trillion won at the end of September, with KDB extending the largest amount of loans totaling 1.89 trillion won.
STX Shipbuilding’s labor union has agreed on a massive job reduction in return for the financial aid.
STX Shipbuilding has been under control by its creditors since 2013 in line with a protracted slump in the shipbuilding sector.
The creditors had provided over 4 trillion won to the shipyard, but it is still reeling from losses. Last year, the shipyard suffered an operating loss of 314 billion won.