Embattled Cruise Operator Genting Hong Kong’s Stocks Plunge More Than 50% After It Warns Of Defaults

The cruise company that is currently in a lot of financial trouble, Genting Hong Kong, witnessed its stock drop by more than 50 per cent following the firm announcing that it might not be able to fulfill its debts and other obligations.

After a four-day hiatus, trading resumed on Thursday.

“There is no certainty that the Group will be able to satisfy its financial commitments… as and when they fall due,” Genting warned in a report to the Hong Kong stock exchange.

“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 news came as MV Werften, the company’s German shipbuilding affiliate, filed for bankruptcy. As a result of the insolvency, Genting issued a warning on Thursday that there could be cross-defaults on $2.8 billion in financing agreements.

Genting Hong Kong, a Genting Group subsidiary, is embroiled in a legal struggle with a German regional authority.

The withdrawal of a $88 million backstop facility – or backup finance for a secondary source of repayment – relating to MV Werften is currently being litigated.

The German federal state of Mecklenburg-Vorpommern has withheld such money, according to Genting’s submission, until the forthcoming verdict on Monday.

The cruise liner, which is owned by Malaysian entrepreneur Lim Kok Thay, has been heavily struck by the pandemic, with travel coming to a halt because to an increase in global Covid-19 cases. According to news reports, Genting Hong Kong ceased payments on debts of about $3.4 billion in 2020.

For the fiscal year ending June 2021, the firm recorded a $238 million net loss, compared to a $742.6 million loss for the same time in 2020.

Genting Hong Kong is a subsidiary of the Genting Group, which also owns Genting Malaysia and Genting Singapore.

The Resorts World leisure park network, which has locations in Singapore, New York City, and the United Kingdom, is one of the conglomerate’s properties. It also operates 30 casinos in the United Kingdom.

(Adapted from Bloomberg.com)

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