Star Cruises owner Genting Hong Kong may file for liquidation as funding dries up

Genting Hong Kong warned investors that cross defaults amounting to US$2.78 billion may follow. PHOTO: STARCRUISES/INSTAGRAM

SINGAPORE (BLOOMBERG) - Genting Hong Kong may file for provisional liquidation as soon as Tuesday (Jan 18) after it was not able to secure funds to help it stay afloat following an insolvency at its German shipbuilding subsidiary.

The troubled cruise operator plans to file for provisional liquidation with courts in Bermuda unless it receives "credible proposals for a solvent, consensual and inter-conditional restruction solution", Genting Hong Kong said in a filing to the Asian financial hub's exchange. Trading of the company's shares has also been suspended.

Genting Hong Kong owns the Star Cruises and luxury Dream Cruises lines which ply the Asia-Pacific, and the luxury Crystal Cruises line headquartered in Miami, Florida.

Its indirect wholly owned shipbuilding subsidiary, MV Werften, filed for insolvency to a local court in Germany last week. That came after salvage talks fizzled amid a dispute between the German authorities and Genting, as both parties blamed the other for MV Werften's collapse and the potential loss of 1,900 jobs.

The Hong Kong cruise firm warned investors that cross defaults amounting to US$2.78 billion (S$3.75 billion) may follow.

The financial health of Genting Hong Kong deteriorated after Covid-19 wiped out travel demand and cruise operations were halted globally. That led the industry to carry out a string of restructuring and insolvencies.

The company, which has offered "seacations" amid a cruise-to-nowhere trend, reported a record loss of US$1.7 billion last May. The latest developments come just as Hong Kong reimposes some of its strictest virus curbs since the pandemic began.

Genting Hong Kong said on Tuesday that a German court had rejected an application that would have provided MV Werften with access to a US$88 million lifeline.

"The company considers that it has exhausted all reasonable efforts to negotiate with the relevant counterparties under its financing arrangements," Genting Hong Kong said in the statement.

"The appointment of provisional liquidators is essential and in the interests of the company, its shareholders and its creditors in order to maximise the chance of success of the financial restructuring and to provide a moratorium on claims and to seek to avoid a disorderly liquidation of the company by any of its creditors," it added.

Separately, Genting Hong Kong said that Mr Alan Smith, Mr Lam Wai Hon Ambrose and Mr Justin Tan have resigned as independent non-executive directors and as such have ceased to be members of the company's audit, remuneration and nomination committees.

Genting Hong Kong is part of Malaysian tycoon Lim Kok Thay’s sprawling casino-to-hospitality Genting empire. Mr Lim and his family own 75.5 per cent of Genting Hong Kong and 43 per cent of Malaysian-listed Genting Bhd

Genting Bhd holds about 52.7 per cent of mainboard-listed Genting Singapore, which owns Resorts World Sentosa. 

Genting Bhd has said that Genting Hong Kong’s borrowings have no cross-default provisions, guarantees or structures that may affect the group.

  • With additional information from The Straits Times

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