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


SINGAPORE (BLOOMBERG) – Genting Hong Kong could file for provisional liquidation as early as Tuesday (January 18) after it was unable to secure funds to help it stay afloat following the insolvency of its German shipbuilding subsidiary.

The struggling cruise line plans to file for interim liquidation with the Bermuda courts unless it receives “credible proposals for a solvent, consensual and cross-conditional reconstruction solution,” Genting Hong Kong said in a filing to the asian financial center stock exchange. Trading in the company’s shares has also been suspended.

Genting Hong Kong has the luxury Star Cruises and Dream Cruises lines that ply the Asia-Pacific, as well as the luxury Crystal Cruises line headquartered in Miami, Florida.

Its wholly-owned indirect shipbuilding subsidiary, MV Werften, filed for insolvency with a local court in Germany last week. It came after bailout talks broke down amid a dispute between German authorities and Genting, with both sides blaming the other for the collapse of MV Werften and the potential loss of 1,900 jobs.

The Hong Kong cruise line has warned investors that cross defaults worth US$2.78 billion (S$3.75 billion) could follow.

Genting Hong Kong’s financial health deteriorated after Covid-19 wiped out travel demand and cruise operations were halted globally. This led the industry to go through a series of restructurings and insolvencies.

The company, which offered “holidays” in the context of a cruise to nowhere, announced a record loss of $1.7 billion last May. The latest developments come just as Hong Kong is reimposing some of its toughest virus control measures since the start of the pandemic.

Genting Hong Kong said on Tuesday that a German court had dismissed a claim that would have given MV Werften access to an $88 million lifeline.

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

“The appointment of provisional liquidators is essential and in the interest of the company, its shareholders and its creditors in order to maximize the chances of success of the financial restructuring and to provide for a moratorium on claims and to seek to avoid a liquidation disorderly conduct of the company by one of its creditors,” he added.

Separately, Genting Hong Kong stated that Mr. Alan Smith, Mr. Lam Wai Hon Ambrose and Mr. Justin Tan have resigned as independent non-executive directors and as such ceased to be members of the Board Committees. audit, remuneration and appointment of the company.

Genting Hong Kong is part of the sprawling Genting empire of Malaysian tycoon Lim Kok Thay. Mr. Lim and his family own 75.5% of Genting Hong Kong and 43% of Malaysia-listed Genting Bhd.

Genting Bhd owns approximately 52.7% of motherboard-listed Genting Singapore, which owns Resorts World Sentosa.

Genting Bhd said Genting Hong Kong’s borrowings do not have any provisions, guarantees or cross-default structures that could affect the group.

  • With additional information from The Straits Times
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