Genting Hong Kong to cease major business activities after no new funding

Cruise operator Genting Hong Kong has filed to close down its business as it runs out of cash as of January 2022. However its operations of cruise lines by Dream Cruises Holding will continue. 

In an announcement uploaded onto HKEXnews, Genting Hong Kong said it had exhausted all reasonable efforts to negotiate with relevant counterparties under its financing arrangements. However, it failed to reach an agreement with various creditors and other stakeholders. As a result, Genting Hong Kong had no access to any further liquidity under any of the group’s debt documents. 

The company is expected to run out of cash by the end of January 2022 at the latest, according to its cash flow forecasts, as it needs to pay ongoing operational expenditure and potentially required payments of certain liabilities that are expected to be made. Looking ahead, the board of Genting Hong Kong believed that the company will imminently be unable to pay its debts as they fall due.

Genting Hong Kong filed at the Supreme Court of Bermuda on 18 January a summons to seek the appointment of joint provisional liquidators to develop and propose any restructuring proposal in respect of the company’s debts and liabilities. 

The board of the company believed that the appointment of the joint provisional liquidators was 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. 

Meanwhile, its brand Dream Cruises will be among some of Genting Hong Kong's business activities that will continue to operate as part of its effort to "to preserve and protect the core assets and maintain the value." However, the company added that the majority of its existing operations will cease to operate.

Dream Cruises is one of the brands that operate cruise-to-nowhere services in Hong Kong. However, as Hong Kong is implementing one of the strictest COVID-19 prevention and control measures in the world, cruise operators can only offer limited services. For example, Royal Caribbean International announced the cancellation of its Spectrum of the Seas’ Hong Kong sailings scheduled in January 2022. The sailings were cancelled after an update to local COVID-19 prevention policies by the Hong Kong government on 14 January. The measures require an extension of the tightened social distancing measures, including the suspension of all cruise operations, until 3 February. 

Lastly, a Bloomberg report said Genting Hong Kong’s indirect wholly-owned shipbuilding subsidiary MV Werften had filed for insolvency in a court in Germany last week. MV Werften has more than 2,800 staff and works with over 600 business partners. 

(Photo courtesy: 123RF)

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