Last-minute deal may save STX from receivership

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Last-minute deal may save STX from receivership

STX Offshore and Shipbuilding may still have a chance to avoid going into court receivership after the shipbuilder’s union finally reached a deal with management on Tuesday, a day after the agreed deadline.

The fate of the company is now in the hands of creditors and the government on whether they will accept the new agreement. The deadline for STX and its union to reach an agreement on a plan to cut costs was initially sent for 5 p.m. on Monday.

According to the shipbuilder, the newly agreed restructuring plan was submitted to the creditors led by Korea Development Bank.

The company’s management and union have agreed not to disclose the details of the new agreement but said it includes a paycheck and bonus cut as well as periods of unpaid leave. This plan is an alternative to the initial proposal that had 75 percent of the production workforce being laid off, bringing down the number of employees from 695 to around 200.

Creditors and the government supported the original layoff proposal as part of an effort to reduce costs by 60 percent.

When the company offered voluntary retirement and relocating to outsourcing contractors, only 144 employees applied - only 30 percent of the entire production workforce, far below the 75 percent required.

Once the creditors and the government accept the restructuring plan, STX will be able to get a refund guarantee from financial institutions, crucial if the shipbuilder is to have any chance of attracting new orders.

Although STX has 147.5 billion won ($138 million) in cash as of the end of February, funds are needed for production expenses including labor costs.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]

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