Genting Hong Kong is facing trouble after falling behind in its financial obligations. A German court will soon decide what happens next with the gaming company’s operations.
The past couple of years haven’t been kind to Genting Hong. It began to invest significant funds into its casino cruise business before COVID-19 rocked the boat. Its two shipbuilding companies in Germany began to sink, and the company hasn’t been able to secure a lifeline.
The company announced earlier this week that its Germany-based MV Werften Holdings Ltd and Lloyd-Werft subsidiaries were out of time and money. It informed the Hong Kong Stock Exchange that insolvency was likely as a result. On Monday, January 17, a German court will issue its ruling on whether that will happen.
Genting Hong Kong Scrambles for a Solution
Genting Hong Kong, a subsidiary of the Genting Group, is trying to avoid insolvency by drawing down a credit facility of about US$88 million. If it fails and if the court doesn’t offer an alternative solution, insolvency may be the only alternative.
Around 2,000 MV Werften employees didn’t receive their pay in December because of the issues. The court has appointed an administrator in order to find a solution.
MV Werften’s bankruptcy has also put at risk the fate of its largest project, the construction of the Global One/Dream cruise vessel. Genting HK subsidiary Dream Cruises is building the ship. It is currently around 80% complete.
Delivery was planned for later in the year from MV Werften’s Wismar shipyard. The administrator will make it a priority to continue the construction of the ship.
The credit facility equates to an amount that the German state of Mecklenburg Vorpommern was willing to extend to the company. However, according to government representatives, Genting Hong Kong refused to make certain concessions. As a result, the extension was voided.
Genting Hong Kong Coming Up Short
Even if the money were to be provided, Genting Hong Kong has a long way to go to recover. MV Werften reportedly has debt of around US$2.8 billion that it can’t cover. Terms of the loans tied to that debt include default proceedings if conditions aren’t met on time.
Genting Hong Kong is still hopeful it can find a solution before Monday. It said in an update with the Hong Kong Stock Exchange on Thursday that it is still negotiating possible alternatives.
The company also pointed out that none of its creditors have yet stepped forward to make demands. This could be a positive sign, although not a guarantee, that they will be flexible.
Genting Hong Kong added, “The Board continues to be in discussion with its bankers, its shareholder partner in Dream Cruises Holding Limited, an indirect non-wholly owned subsidiary of the Company, and its professional advisers to evaluate options available to the Group.”
Shares of the company have lost over 50% as a result of the ongoing financial struggles. That was after the Hong Kong Stock Exchange halted trading for four days amid the struggles.
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