Genting Hong Kong Ltd, an operator of casino cruise ships and a joint venture casino operator in the Philippines, says it will “potentially proceed” with filing for provisional liquidation of the company with a court in Bermuda on Tuesday (January 18). That is unless it receives credible proposals for a “solvent, consensual and inter-conditional restructuring solution,” the company said in a Tuesday filing to the Hong Kong Stock Exchange.
In a separate Tuesday filing, Genting Hong Kong said its shares were being suspended from the Hong Kong bourse with effect from 9am.
The decision regarding likely liquidation comes after a district court in Germany rejected Genting Hong Kong’s application against the German state of Mecklenburg Vorpommern, in order for the company to be able to draw down a US$88-million backstop facility that Genting Hong Kong said should have been provided by the authorities in that state.
In Monday’s ruling, the district court said the state government was not required to make the loan payments at this time, as Genting Hong Kong had not provided sufficient evidence that it was in an emergency, according to local media reports.
The funding was crucial to the company’s ability to meet its financial obligations, Genting Hong Kong said. The company added in Tuesday’s filing that it had been “seeking to access various alternative sources of liquidity under existing contractual commitments,” but it had not been successful in such effort.
Genting Hong Kong – part of Malaysian conglomerate Genting Bhd – controls the Dream Cruises, Crystal Cruises, and Star Cruises brands. The cruise group has struggled with the effects of the Covid-19 pandemic on its excursion and shipbuilding businesses.
A risk of creditor action against Genting Hong Kong comes after MV Werften Holdings Ltd, the group’s shipbuilding unit in Germany, filed for insolvency earlier in January. That gave rise to an event of default under an existing facility agreement, which in turn triggered cross-default events under other financing arrangements of the Genting Hong Kong group, comprising an aggregate principal amount of just above US$2.77 billion.
In its latest filing, Genting Hong Kong said the inability to access the facility held by a German state “has further impacted the group’s ability to meet its financial obligations” under its financing arrangements. As of Tuesday, “no definitive agreements on a solvent, consensual and inter-conditional restructuring solution amongst the various parties has been reached,” it added.
Genting Hong Kong said additionally that the appointment of provisional liquidators “is 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 and to provide a moratorium on claims and to seek to avoid a disorderly liquidation of the company by any of its creditors.”
The company said it would continue to work with its professional advisers “towards implementation of a consensual and inter-conditional restructuring of the group to preserve value for all creditors and other stakeholders.”
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