The key creditor of South Korea's troubled STX shipbuilding group plans to sell the firm's European arm in an effort to reduce its massive debts, a report said Thursday.

The state-run Korea Development Bank (KDB) will soon pick sale managers and draw up strategies for the sale of STX Europe, Yonhap news agency said.

It quoted an unnamed KDB official as saying nothing has been decided yet on the scale of the sale, or how it will be carried out.

The South Korean group acquired STX Europe, previously known as Aker Yards ASA, a Norwegian shipbuilder, in 2008.

The group, which has 11 subsidiaries, has been reeling under mounting debt after being hit by a global downturn in the shipbuilding and shipping sectors.

Creditors have provided loans to keep the group alive in exchange for restructuring, but its shipping unit, STX Pan Ocean, filed for court receivership in June.

The group has also tried to sell its domestic and overseas assets.

Its European assets include shipbuilders STX Finland and STX France, which is two-thirds owned by STX Europe. The other third of STX France is owned by the French state.

STX France operates two shipyards, one in Saint-Nazaire and the one in Lorient, while the Finnish operations include three shipyards in Turku, Rauma and Helsinki.

In December last year the Saint-Nazaire yard -- which has struggled to secure major new orders in recent years -- won a lifeline with a billion-euro deal to build a luxury liner for Miami-based Royal Caribbean International.

The yard employs 2,100 people and provides work for another 4,000 subcontractors.

Last month STX Finland unveiled plans to cut 700 jobs by June 2014 and wind down work at one of its three shipyards, which employ 2,500 people.

 

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