Genting Hong Kong: The other shoe drops

As we noted when German shipbuilder MV Werften filed for insolvency on January 10, the move raised big questions about the future of its parent Genting Hong Kong, whose operations include Dream Cruises, Crystal Cruises and Star Cruises, and the Resorts World Manila casino and resort in the Philippines.

In a Hong Kong Stock Exchange announcement, Genting Hong Kong, says it “will potentially proceed with a filing of provisional liquidation of the company with the competent court of Bermuda on 18 January 2022 (Bermuda time)”

That decision came after a German court rejected an application by Genting to require the German state of Mecklenburg-Vorpommern to permit the drawdown of an $88 million backstop facility for the shipyard.

According to the stock exchange filing, “in addition to seeking to drawdown under the State M-V backstop facility, the company has been seeking to access various alternative sources of liquidity under existing contractual commitments including application to the participating banks under the Global 1 facility agreement for the release of, $81,000,000 of the company’s own funds currently held in a liquidity reserve account under the Global 1 Facility Agreement. To date, the participating banks have not approved such disbursement.”

This, says Genting, “has created an immediate and significant gap in the liquidity resources of the group. The inability of the company to drawdown the State M-V Backstop Facility has further impacted the Group’s ability to meet its financial obligations under its financing arrangements as and when they fall due.

“The company considers that it has exhausted all reasonable efforts to negotiate with the relevant counterparties under its financing arrangements. Notwithstanding these efforts and lengthy negotiations with creditors and other stakeholders as of the date of this announcement, no definitive agreements on a solvent, consensual and inter-conditional restructuring solution amongst the various parties has been reached.

“In view of the group’s financial conditions, unless the company receives credible proposals for a solvent, consensual and inter-conditional restructuring solution, the Board will potentially proceed with a filing of provisional liquidation of the company with the competent court of Bermuda on 18 January 2022 (Bermuda time) (the “Provisional Liquidation”).

“The board believes that the appointment of provisional liquidators is essential and in the interests of the company, its shareholders and its creditors in order to maximize 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.

“Following the appointment of the provisional liquidators, the company, together with its professional advisers, will continue to work towards implementation of a consensual and inter- conditional restructuring of the group to preserve value for all creditors and other stakeholders.”