Cruise operator Genting Hong Kong shares plunge after default warning
Genting Cruise Lines’ ship is seen berthed at Marina Bay Sands Cruise Center (Singapore) on Thursday, November 16, 2017.
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The shares of a struggling cruise operator Genting Hong KongAfter the announcement that it might not be able pay its debts or other obligations, shares plunged by more than half.
Following a four-day suspension, trade resumed on Thursday
Genting claimed in a filing submitted to the Hong Kong stock market that there’s “no guarantee that the Group will be able to meet its financial obligations… as and when they fall due.”
It stated in the filing that “if the Group cannot meet its obligations to pay any debts when they become due, or to agree to renew or extend its borrowings, or any other related arrangements with its creditors, it may have a material adverse impact on its business, prospects and operating results.”
This development occurred as MV Werften, its German shipbuilding division filed for bankruptcy. It sparked a warning from Genting on Thursday that there could be potential cross-defaults on financing arrangements worth $2.8 billion — as a result of the insolvency.
Genting Hong Kong is a Genting Group subsidiary and is currently in a legal battle against a German regional government.
The ongoing legal proceedings involve the drawdown of a $88 million backstop facility – or backup funding for a secondary source of repayment – that’s related to MV Werften.
Genting stated in its filing that the German federal state of Mecklenburg-Vorpommern had withheld those funds, pending the upcoming ruling on Monday.
Malaysian tycoon Lim Kok Thay runs the cruise operator. The pandemic has caused travel to stop due to rising Covid cases. Genting Hong Kong has stopped payments for debts exceeding $3.4 million in 2020. according to news reports.
According to the company, a net loss of $238 million was reported for the six months ending June 2021. This compares with a loss of $742.6 million in the same period last year.
The conglomerate also owns Resorts World, which has parks in Singapore, New York City and the United Kingdom. The conglomerate also owns 30 casinos in the U.K.