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

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SINGAPORE (BLOOMBERG) – Genting Hong Kong could file for preliminary liquidation as early as Tuesday (January 18) after the company was unable to raise funds to stay afloat following a bankruptcy at its German shipbuilding subsidiary.

The troubled cruise operator plans to apply to Bermuda courts for a preliminary liquidation unless it receives “credible proposals for a solvent, amicable and conditional restructuring solution,” Genting Hong Kong said in a filing with the Asian financial hub’s stock exchange. Trading in the company’s shares has also been suspended.

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

Its indirect wholly-owned shipbuilding subsidiary MV Werften filed for bankruptcy at a district court in Germany last week. This comes after salvage talks fizzled amid a row between German authorities and Genting, with both parties blaming the other for the collapse of MV Werften and the potential loss of 1,900 jobs.

The Hong Kong cruise line warned investors that cross defaults of 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 worldwide. This prompted the industry to undergo a series of restructurings and bankruptcies.

The company, which has offered “Seacations” amid a cruise trend to nowhere, reported a record $1.7 billion loss last May. The latest developments come as Hong Kong reinstates some of its toughest virus restrictions since the pandemic began.

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

“The Company believes that it has made 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 to maximize the chances of success of the financial restructuring and to grant a moratorium on receivables and avoid a disorderly liquidation of the company by any of its creditors,” it added added.

Separately, Genting Hong Kong announced that Mr. Alan Smith, Mr. Lam Wai Hon Ambrose and Mr. Justin Tan have resigned as independent non-executive directors and as such are no longer members of the Company’s Audit, Compensation and Nominating Committees.

Genting Hong Kong is part of Malaysian tycoon Lim Kok Thay’s sprawling Genting empire, which stretches from casino to hospitality. Mr. Lim and his family own 75.5 percent of Genting Hong Kong and 43 percent of Genting Bhd, which is listed in Malaysia

Genting Bhd owns approximately 52.7 percent of Genting Singapore, which is Mainboard listed and owns Resorts World Sentosa.

Genting Bhd has stated that Genting Hong Kong’s bonds do not contain any cross-default provisions, guarantees or structures that could adversely affect the group.

• With additional information from The Straits Times

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