GGRAsia – Genting HK in second cruise vessel sale-leaseback deal

Genting HK in second cruise vessel sale-leaseback deal

Dec 26, 2019 Newsdesk Latest News, Rest of Asia, Top of the deck

Genting Hong Kong Ltd, an operator of casino cruise ships and investor in Asian land-based casinos, says one of its units has agreed to sell and lease back an under-construction vessel intended for its Crystal Cruises business. The liner – to be named Crystal Endeavor – is currently being built in one of Genting Hong Kong’s shipyards in Germany.

Crystal Endeavor SAS, an indirect subsidiary of Genting Hong Kong incorporated in France, is selling the vessel for a total consideration of EUR350 million (US$388.2 million), the parent company said in a Monday filing to the Hong Kong Stock Exchange.

The liner will be a luxury passenger cruise ship accommodating a maximum of about 200 passengers, according to the filing. Construction of the ship is expected to be completed in early 2020, with delivery of the vessel expected to be in May 2020, added Genting Hong Kong.

The filing identified the purchaser as SNC Endeavor Leasing, a company incorporated in France, and which is wholly-owned by Cafi Hester and Doumer Finance. The latter two companies are indirect units of banking institution Crédit Agricole Group.

Additionally on Monday, Crystal Endeavor SAS signed a “subordinated loan agreement” with the purchaser, under which the seller will grant a loan of up to EUR300 million – with a 7.0-percent interest rate per year – to the purchaser to finance the acquisition.

Genting Hong Kong said also that – prior to completion of the entire deal – its unit would sign a “bareboat charter agreement” and a share purchase option agreement, under which the Crystal Endeavor SAS subsidiary would have the option to purchase all the shares in SNC Endeavor Leasing. “The parties are still in the process of negotiating the terms of the bareboat charter agreement and the share purchase option agreement,” said the parent company in its filing.

In Monday’s filing, Genting Hong Kong said its board considered the transactions “to be beneficial” to the group. The company also noted the deal would provide additional working capital “on reasonable terms” to support its business activities and capital expenditure, “while at the same time maintaining the appropriate rights over the vessel, which will strengthen the cash flow of the group”.

It added: “The proceeds will also be used for working capital for future operations of the … vessels [currently being built] and providing liquidity to our shipyards.”

Genting Hong Kong has been seeking funds to finance the expansion of its cruise business. The company has developed a three-brand cruise portfolio with focus on several different market segments: Crystal Cruises for what it terms the ultra-luxury segment; Dream Cruises for what it describes as the premium segment; and Star Cruises for what it defines as the contemporary segment.

In September, Genting Hong Kong said one of its other units had agreed to sell and lease back the Genting Dream ship, one of the vessels of the Dream Cruises segment.

In August, the Hong Kong-listed company had announced the sale of up to 35 percent of the equity interest in its unit Dream Cruises Holding Ltd for up to US$489 million.

Aside from Crystal Endeavor, Genting Hong Kong is currently building two “Global Class” ships intended for the Asian market, the first to be delivered in 2021 and the second in 2022.

Genting Hong Kong has an aggregate of eight cruise ships – across its three distinct market segments – containing casinos run by its Resorts World at Sea business. The gaming facilities have table games and slot machines. The parent company also has a stake in the land-based Resorts World Manila casino resort in the Philippines.