Troubled cruise ship operator Genting Hong Kong says it is preparing to file a provisional liquidation of the company in Bermuda after failing to secure US$88 million in funding from the State of Mecklenburg Vorpommern to maintain its German shipyards.
The move follows a decision by a German court on Monday denying Genting Hong Kong’s bid to compel payment of the backstop facility, which the company claims it is entitled to under agreements it signed with the state last year. The court ruled that Genting Hong Kong would not be in a distress situation without the payment, according to media reports.
In a Tuesday filing, the cruise ship giant said it had also attempted to access US$81 million of the company’s own money currently held by lenders in a liquidity reserve account under a facility agreement but had been denied by participating banks.
As such, and having “exhausted all reasonable efforts to negotiate with the relevant counterparties under its financing arrangements”, the company was now preparing the relevant legal procedures for the filing of provisional liquidation due to an inability to meet its financial obligations under its financing arrangements.
“The Board believes that the appointment of provisional liquidators is essential and in the interests of the Company, its shareholders and its creditors in order to maximise the chance of success of the financial restructuring and to provide a moratorium on claims and to seek to avoid a disorderly liquidation of the Company by any of its creditors,” Genting Hong Kong explained.
“Following the appointment of the provisional liquidators, the Company, together with its professional advisers, will continue to work towards implementation of a consensual and inter-conditional restructuring of the Group to preserve value for all creditors and other stakeholders.”
Genting Hong Kong’s German-based subsidiaries, MV Werften and Lloyd Werft Bremerhaven, filed for insolvency last week with the company warning at the time that doing so was likely to trigger events of default events under various financing arrangements it had reached with creditors in 2021 in relation to debts totaling almost US$2.8 billion.
Tuesday’s Hong Kong Stock Exchange announcement was also pre-empted by the news that three of the company’s independent non-executive directors, Alan Smith, Ambrose Lam Wai Hon and Justin Tan Wah Joo, have stepped down.
Trading in Genting Hong Kong shares was suspended as of 9am.
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