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Shares of cruise operator Genting Hong Kong plunge more than 50% as it warns of defaults

A Genting Cruise Lines ship sits berthed at the Marina Bay Sands Cruise Center in Singapore, on Thursday, Nov. 16, 2017.
Ore Huiying | Bloomberg | Getty Images

Shares of embattled cruise operator Genting Hong Kong plunged more than 50% after the company announced that it may not be able to pay its debts and other obligations.

Trade resumed on Thursday following a four-day halt.

Genting said in a filing to the Hong Kong stock exchange thatthere’s “no guarantee that the Group will be able to meet its financial obligations… as and when they fall due.”

“If the Group is unable to meet its obligations to repay any debts as they fall due or to agree with its relevant creditors on the renewal or extension of its borrowings or any related alternative arrangements, there may be a material adverse effect on the Group’s business, prospects, financial condition and operating results,” it said in the filing.

The development came as its German shipbuilding subsidiary MV Werften filed for insolvency. 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.

Legal woes in Germany

Genting Hong Kong, a subsidiary of the Genting Group, is in the middle of a court battle with a regional government in Germany.

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.

The cruise operator, controlled by Malaysian tycoon Lim Kok Thay, has been hit hard by the pandemic, as travel hit a standstill due to global Covid cases rising. Genting Hong Kong halted payments on debts of almost $3.4 billion in 2020, according to news reports.

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 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.

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