Defiant Kang on the jobAlthough Korea Development Bank, the main creditor of cash-strapped STX Group, requested that Chairman Kang Duk-soo step down from his post as chief executive of the conglomerate’s flagship company on Tuesday, Kang arrived at work as usual yesterday. His appearance was seen as an indication of his determination to maintain management control.
On Tuesday, KDB and other creditors of STX Offshore and Shipbuilding, the conglomerate’s flagship company, asked Kang to resign from his CEO post and give up his seat as chair of the company’s board of directors. Creditors said new management should be established to take the lead in salvaging STX Offshore and Shipbuilding, which sought a voluntary corporate restructuring agreement in April.
Conflict, however, is brewing between STX Group and its creditors as both seek management control.
In response to KDB’s request that Kang give up his CEO position at STX Offshore and Shipbuilding, the world’s fourth-largest shipbuilder, and its remarks that a new chief executive will be nominated later this week, STX Group released a statement expressing strong opposition to the plan. Park Dong-hyuk, vice president of Daewoo Shipbuilding and Marine Engineering, is known to be a candidate to succeed Kang.
“[Creditors] appointing a new chief executive of STX Offshore and Shipbuilding is an act against the purpose of the voluntary corporate restructuring agreement that oversteps its authority,” STX Group said in a statement.
The conglomerate argues that a voluntary corporate restructuring agreement is a process to help a company overcome its liquidity crisis and that its management control should be maintained.
The strong opposition by STX Group under Kang comes as initial expectations were high that the shipbuilding company will be led by its current chief executive after restructuring takes place. Many creditor sources have hinted that it would be difficult to find a replacement for Kang. However, those expectations changed when creditors inspected the company and found its financial condition far more distressed than anticipated. Sources also noted that Kang appeared not to have much in the way of assets to contribute to normalization of business conditions for the shipbuilder.
Some insiders, however, said that if a new CEO from the outside is not well informed of business conditions, then it will take longer for STX Offshore and Shipbuilding to normalize. They note that for the company to survive through the restructuring process, Kang’s business know-how and personal networks are desperately needed.
“STX Group is structured in a way that involves the process of [manufacturing] components, engines and building ships,” said an official from STX. “Business would normalize only under [a person] that is able to control other group affiliates and not only STX Offshore and Shipbuilding.”
The official also said “[Kang] should hold responsibility for management failure, but [creditors] shouldn’t deny what [the company] has reaped so far.”
BY LEE EUN-JOO, LEE TAE-KYUNG [firstname.lastname@example.org]