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Cash-strapped STX Group, the nation’s fourth-largest shipbuilder, is reportedly in a dispute with Orix, a Japanese financial service provider, over the management rights to its affiliate STX Energy.
The alleged conflict between the two companies started as Orix, which had bought a 43.1 percent stake in STX Energy for 360.1 billion won ($330 million) as a financial investor in December last year, emerged as the firm’s biggest shareholder by increasing its shareholding to 50.1 percent last month.
Orix acquired the additional 6.9 percent of shares in the conglomerate’s heating and power unit by trading exchangeable bonds it received from STX Group. This move made STX Corp., the holding company of STX Group, the second-biggest shareholder of STX Energy.
Orix didn’t comment on its additional stock purchase. But STX Group officials suspect that the Japanese firm is trying to acquire its energy business arm.
To keep the management rights from being transferred to a foreign company, STX Group chairman Kang Duk-soo exercised a call option for the 6.9 percent stake that Orix acquired. STX Corp. also signed an agreement with Hahn & Company, a local private equity firm, to sell its 43.1 percent stake in STX Energy on May 3. The company said it would also sell the 6.9 percent stake if acquired after the call option to protect its management rights from Orix’s hostile M&A bid.
Despite STX Corp.’s response, industry sources said it was uncertain that the shipbuilding giant would maintain its management rights in STX Energy due to a disadvantaged clause under a contact signed with Orix when it sold its 43.1 percent stake last year. According to the clause, Orix is allowed to issue new shares if the corporate value of STX Energy falls after buying the stake.
The dispute between STX Group and Orix could develop into a legal battle as STX Group is reviewing a lawsuit to nullify the clause, industry sources added.
STX Energy is one of the key affiliates of STX Group, focusing on energy businesses such as combined power plant building and operations and overseas resource exploration and production.
By Seo Jee-yeon (jyseo@heraldcorp.com)
The alleged conflict between the two companies started as Orix, which had bought a 43.1 percent stake in STX Energy for 360.1 billion won ($330 million) as a financial investor in December last year, emerged as the firm’s biggest shareholder by increasing its shareholding to 50.1 percent last month.
Orix acquired the additional 6.9 percent of shares in the conglomerate’s heating and power unit by trading exchangeable bonds it received from STX Group. This move made STX Corp., the holding company of STX Group, the second-biggest shareholder of STX Energy.
Orix didn’t comment on its additional stock purchase. But STX Group officials suspect that the Japanese firm is trying to acquire its energy business arm.
To keep the management rights from being transferred to a foreign company, STX Group chairman Kang Duk-soo exercised a call option for the 6.9 percent stake that Orix acquired. STX Corp. also signed an agreement with Hahn & Company, a local private equity firm, to sell its 43.1 percent stake in STX Energy on May 3. The company said it would also sell the 6.9 percent stake if acquired after the call option to protect its management rights from Orix’s hostile M&A bid.
Despite STX Corp.’s response, industry sources said it was uncertain that the shipbuilding giant would maintain its management rights in STX Energy due to a disadvantaged clause under a contact signed with Orix when it sold its 43.1 percent stake last year. According to the clause, Orix is allowed to issue new shares if the corporate value of STX Energy falls after buying the stake.
The dispute between STX Group and Orix could develop into a legal battle as STX Group is reviewing a lawsuit to nullify the clause, industry sources added.
STX Energy is one of the key affiliates of STX Group, focusing on energy businesses such as combined power plant building and operations and overseas resource exploration and production.
By Seo Jee-yeon (jyseo@heraldcorp.com)
