Goseong Offshore & Shipbuilding Co., a midsize manufacturer of container ships and ship components in South Korea that has been under a court-led reorganization program, has failed to attract bidders in its latest auction that would have found a new owner for the unit of bankrupt STX Offshore & Shipbuilding Co.

The bankruptcy court that is handling the insolvency proceedings of Goseong Offshore & Shipbuilding will rearrange another auction early next year at the earliest.

According to multiple sources from the investment bank industry on Tuesday, the Seoul Central District Court has notified that the auction to sell Goseong Offshore & Shipbuilding fell through because only one contestant with questionable fundraising ability entered a bid.

In the preliminary auction last month, three bidders showed interest by each submitting a letter of intent. In the main bidding last week, however, only one bidder took part in the auction, which the court has rejected as it was not able to prove its ability to finance acquisition funds.

An unnamed court official said that it isn’t considering breaking up the company as the value Goseong Offshore & Shipbuilding can generate when it remains in operation is higher than the value of its liquidation based on its study. It is most likely that the company will be up for sale again early next year at the earliest, and there is low possibility that the sale will be offered in a package deal with its parent company STX Offshore & Shipbuilding, the official said.

Industry sources noted that the sales price could slightly go down from earlier 100 billion won ($82.8 million).

Goseong Offshore & Shipbuilding was founded in 1985 as a manufacturer and supplier of ship components. Its core business includes manufacturing blocks for major shipyards - a major component of liquid cargo ships or tankers, container ships, and vessels. It became a unit under STX Offshore & Shipbuilding in 2011.

Last year, Goseong Offshore & Shipbuilding posted an operating loss of 13.8 billion won on sales of 254.2 billion won with 448.5 billion won asset and 322.5 billion won debt.

By Yoo Tae-yang

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