South Korea’s STX Construction Co. that has been under court protection since 2013 is on the verge of liquidation after failing to find a buyer in its latest open bid.

According to multiple sources from the investment bank industry on Friday, the Seoul Central District Court said last week that the latest open competitive bidding for STX Construction fell through although it received final offers from several potential buyers. An unnamed court official said that an enterprise tendered both preliminary and final bids but it failed to meet the requirements to be selected as preferred bidder as it was not able to prove its ability to finance the takeover.

With the latest competitive sale of STX Construction going down the drain, the court is now expected to personally knock on construction firms as well as big investors in the investment bank industry including private equity firms with acquisition resources for their interest in the private sale.

If no investor shows interest, STX Construction would have to be liquidated. The court has said earlier that if sales keep falling through, STX Construction could embark on the process of liquidation given that it is difficult for the construction company to revive on its own.

Last year, STX Construction saw 300 million won ($265,200) worth of net loss on sales of 377.8 billion won. The company’s spending on financial costs has also reached 5.3 billion won during the period, placing a heavy burden on overall operations. Based on its own restructuring plan proposed to the court, STX Construction should repay 9.3 billion won worth of debt to creditors this year.

Conditions have turned worse for STX Construction as it is projected to see a significant drop in sales this year after its affiliates that have accounted for more than 40 percent of its construction orders have either applied for court receivership or have been sold. The company’s construction capability ranking announced by the Ministry of Land, Infrastructure and Transport has also dropped to 70 this year from 53 last year.

By Yoo Tae-yang

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]