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Cruise company GENHK looks set to shut down most operations

Casino cruise ship operator Genting Hong Kong Inc Genting on Tuesday asked a Bermuda court to clear the company and appoint a joint temporary liquidator to help it restructure its debt and continue as an "ongoing concern."

It confirmed the move in a filing with the Hong Kong Stock Exchange on Wednesday and said it expected the Bermuda Supreme Court to rule on the matter on Thursday afternoon local time.

Earlier this month, Genting Hong Kong said insolvency at its controlled German shipbuilding company would "trigger cross-debt incidents under certain financing arrangements of the group," comprising a total of just over $2.77 billion.

Genting Hong, part of Malaysian conglomerate Genting Bhd, controls Dream Cruise, Crystal Cruise and Star Cruise brands. Cruise groups are struggling with the impact of the COVID-19 pandemic on their travel and shipbuilding businesses.

"To preserve and protect our core assets and to maintain the value of the group, the group's consistent business activities, including Dream Cruise Holdings' cruise line operations, will continue," the company said on Wednesday.

However, it added: "Most of the group's existing operations are expected to cease operations."

According to a filing on Wednesday, Genting Hong Kong "has no access to any further liquidity in line with the group's debt documents and the company's available cash balance is expected to be depleted at or around the end of January."

This is because "operating expenditures are ongoing, and payment of certain liabilities that are expected to be paid before that date was potentially necessary."

As a result, the company's board of directors believes that "if the company fails to pay its debt, it will not be able to pay it immediately."

"We have made every reasonable effort to negotiate with the relevant counterparties in accordance with the financing agreement," Genting Hong Kong reiterated.

On Tuesday, the company said the decision to apply for liquidation was made after a German district court rejected Genting Hong Kong's application for the German state of Mecklenburg-Volpomern. The dispute included an $88 million backstop facility that Genting Hong Kong said should have been provided by the state's authorities.

The company told its board on Wednesday that it believed the appointment of a joint interim liquidator was "essential" and "to maximize the chances of success of financial restructuring, provide a moratorium on claims from unsecured creditors and avoid disorderly liquidation by the company," for the benefit of the company, shareholders and creditors.

Trading of public shares in Genting Hong Kong was suspended from 9 a.m. on Tuesday, and the pause will continue "until further notice," the company said in a recent filing.

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