STX Dalian's affiliates file for bankruptcy reorganization

Six affiliate companies of STX Dalian Group, the largest wholly foreign-funded shipbuilding company in China, have sought bankruptcy reorganization proceedings, a court in Dalian city of northeast China's Liaoning province said on Thursday.

STX Dalian is the China unit of South Korea's STX Corp, one of the top-five shipbuilders in the world.

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Creditors should submit claims to the six companies, including STX (Dalian) Shipbuilding Co Ltd, STX (Dalian) Marine Engineering Co Ltd and STX (Dalian) Engine Co Ltd, before Sept 26, and the first meeting of creditors should be held between Oct 9 and 11, according to a statement issued by the Dalian Intermediate People's Court.

The court said because of their inability to pay off debts before the due date, the companies had filed a bankruptcy reorganization plan with the court.

STX Dalian was established in Dalian's Changxing Island Industrial Zone in 2007, with a registered capital of $1.13 billion and 13 branch companies conducting shipbuilding, logistics and estate development businesses. The group has more than 21,000 employees.

The initial development target for STX Dalian as envisaged by STX Corp was to be a large-scale regional base for manufacture of a comprehensive range of products such as liquefied natural gas carriers, huge container ships and crude carriers, offshore pipe layers and oil drilling rigs to match the production capacity of its South Korean base in Jinhae.

However, the group's shipbuilding business began to decline in 2008, when the global financial crisis occurred and it has since been suffering from decreasing demand for marine transportation and offshore engineering equipment, as well as ship engines.

Zhao Yongfeng, a researcher at Beijing-based China shipbuilding industry research center, estimated that STX Dalian's shipbuilding and marine engineering businesses may owe up to 1.3 billion yuan ($210 million) to more than 100 Chinese and foreign suppliers since 2008. It is still unclear how much it owes to banks in both China and abroad.