STX에너지의 경영권 분쟁과 전환상환우선주의 역할

STX group was in a serious financial trouble in year 2012. To raise cash to resolve the liquidity crisis, STX group decided to sell some shares of STX energy. After negotiation with several potential financial investors, Orix, a Japanese corporation, decided to invest 360 billion Won in the STX energy, including 194 billion Won worth of new shares. Half of the new shares were convertible preferred stocks and the other half were redeemable convertible preferred stocks. The RCPS had a refixing condition depending on the value of assets of the STX energy. As a result, Orix become the second largest shareholders of the STX energy. During 2013, STX and Orix had dispute over the liquidation of a subsidiary company, STX Solar and providing cashes to other companies in the STX group. Orix strongly opposed the request. After these confrontations, STX tried to repeal the refixing conditions in the RCPS that Orix had. Orix decided to convert the preferred stocks and exchangeable bonds to common stock. As a result, the controlling shareholders changed to Orix and the dispute over the control of the firm started. Upon the ultimatum of creditors, STX finally gave up and decided to relinquish the remaining equity of the STX Energy to Orix. Thus, Orix obtained the full control over the STX Energy and sold it to GS group afterward. Through this case, students can learn the characteristics of RCPS and related accounting treatments. It will help students to understand the economic consequences of the accounting treatments.