Genting Hong Kong Limited’s stock tumbled in value this week after it filed a financial document with the Stock Exchange of Hong Kong Limited on August 19, explaining that it’s temporarily suspending all payments to the group’s financial creditors to preserve liquidity.
The company said that it would reserve its remaining available cash "to maintain critical services" for its operations. “The COVID-19 pandemic has had and will continue to have a material impact on the financial position and results of operation of the Group," Genting's filing said.
Genting is the parent company of Star Cruises, Dream Cruises and Crystal Cruises, as well as Resorts World Manila and two German shipyards, MV Werften and Lloyd Werft.
In a statement provided to Travel Agent, Crystal said: "Crystal’s parent company, Genting Hong Kong, is engaged in a financial restructuring and fundraising exercise to address liquidity issues that resulted from its ships not operating because of COVID-19. It is important to understand that the company is not going out of business. Whatever option our parent company pursues, it will allow Crystal to operate its business. Additionally, we have always been committed to honoring our contractual obligations with guests and travel partners, including the processing of refunds. While we have extended our suspension of global voyages until the end of the year, we are working with government and health authorities in our key markets to resume sailing when it is safe to do so and we look forward to welcoming our guests back on board at that time."
Cost Reduction Measures
In addition, Genting said in the filing that it’s "undertaken a number of cost reduction and cash conservation measures to mitigate the effects of the resultant loss of revenues from its operations." It also said it’s working to renegotiate financial arrangements with interested parties but told the exchange that more time is needed to work on potential agreements.
The company also said that on August 17, Dream Global One Limited and Dream Global Two Limited, subsidiaries of the company, were required to pay €3.7 million (approximately $4.4million) in connection with the construction of certain ships. As of August 19, the company acknowledged that the fees had not been paid and that “constitutes an event of default” under the finance documents of the subsidiaries.
As of July 31, 2020, Genting said it outstanding financial indebtedness is at $3.37 billion. Thus, Genting has invited all financial creditors to a virtual meeting to be held as soon as practical, where it plans to release more information.
Specifically, it's asking financial creditors to form a steering committee; evaluate the group’s restructuring proposal and “agree on a holistic restructuring solution"; and refrain from any enforcement action so stakeholders have a stable platform for negotiations and implementation of restructuring.