Troubled South Korea shipbuilder STX Heavy Industries Co. issued a guarantee on a loan defaulted on by its Chinese heavy machinery manufacturer, STX Dalian Heavy Industries Co., from China's Bank of Communications and has been ordered to repay the loan, reports Yonhap.
Unlisted STX Dalian Heavy Industries is a wholly owned subsidiary of STX Heavy Industries and has been ordered to repay the 60.9 billion won (US$56.8 million) loan by the China International Economic and Trade Arbitration Commission after the Chinese unit failed to service the principle and interest.
Yonhap explains that the STX Group, once the country's 13th-biggest conglomerate, is struggling to deal with a liquidity shortage and mounting debts of its major affiliates from a downturn in the shipbuilding and shipping sectors. The group's holding company STX Corp. and its three ailing subsidiaries -- STX Offshore & Shipbuilding, STX Heavy Industries and STX Engine -- have been under a self-rescue plan to get back on their feet.
Source: Yonhap News Agency