Cruise operator Genting Hong Kong said Wednesday it has filed to wind up the company, as its cash is set to run out by end of January.
It comes on the heels of warnings last week from the company that it could face potential cross-defaults on financing arrangements worth $2.8 billion, as a result of the insolvency of its German shipbuilding subsidiary MV Werften.
In a filing to the Hong Kong exchange on Wednesday, Genting said the company will “imminently be unable to pay its debts as they fall due,” as liquidity dries up.
The embattled cruise operator said it filed the application to wind up the company at the Supreme Court of Bermuda, after the company “exhausted all reasonable efforts to negotiate with the relevant counterparties under its financing arrangements.”
However, the firm said in its Wednesday filing that certain businesses — including but not limited to the operations of cruise lines by Dream Cruises — shall continue.
Genting Hong Kong owns Star Cruises and Dream Cruises, which operate in the Asia region, as well as the Resorts World theme park in Manila. It also owns the Crystal Cruises line which offers a range of round trips from Miami, Antarctica and Barcelona.
“However it is anticipated that majority of the Group’s existing operations will cease to operate,” it said.
Genting Hong Kong is part of a bigger conglomerate that also includes Genting Malaysia and Genting Singapore. Among its assets, the conglomerate owns the Resorts World leisure park chain, which includes those in Singapore, New York City, and the United Kingdom. It also has 30 casinos across the U.K.
The company, controlled by Malaysian tycoon Lim Kok Thay, has been hard hit by the Covid-19 pandemic as travel came to a standstill.
Trading of Genting Hong Kong shares were suspended on Tuesday, and will remain halted until further notice, said the firm.
Legal battle in Germany
Genting Hong Kong was in the middle of legal proceedings with a regional government in Germany to drawdown a $88 million backstop facility – or backup funding for a secondary source of repayment – that’s related to MV Werften.
But in a ruling this week, the German federal state of Mecklenburg-Vorpommern rejected Genting’s application to access the $88 million, according to Genting’s filing earlier this week.
“The Company and the Group have no access to any further liquidity under any of Group’s debt documents and the Company’s available cash balances are expected to run out on or around end of January 2022 according to the Company’s cashflow forecasts,” Genting said Wednesday.
It said it has applied to the court to appoint provisional liquidators, and has also sought to authorize the liquidators to undertake the firm’s debt restructuring.
The company reported a $238 million net loss for the period ending June 2021, as compared to a $742.6 loss million for the same period in 2020. Genting Hong Kong halted payments on debts of almost $3.4 billion in 2020, according to news reports.