Malaysian tycoon’s Genting Hong Kong halts paying creditors as global coronavirus pandemic stalls cruise business

Genting Hong Kong said it will use its available funds to maintain critical services for the company’s operations and asked creditors to form a steering committee to evaluate a planned restructuring proposal

The company owed a total of US$3.4 billion as of July 31, according to a statement to the stock exchange

Reading Time:2 minutes

Aerial view of the World Dream cruise ship at the Kai Tak Cruise Terminalin Hong Kong on 5 February 2020. Photo: Martin Chan

Published: 3:16pm, 20 Aug 2020Updated: 3:56pm, 20 Aug 2020

A cruise ship operator controlled by Malaysian tycoon Lim Kok Thay suspended all payments to creditors, triggering a 36 per cent drop in the company’s shares and denting investor confidence in Lim’s wider business empire.

Genting Hong Kong said it will use its available funds to maintain critical services for the company’s operations and asked creditors to form a steering committee to evaluate a planned restructuring proposal, according to a statement to the Hong Kong stock exchange late Wednesday. The company owed a total of US$3.4 billion as of July 31, it said.

The firm blamed the cash crunch on the coronavirus pandemic and said the payment halt is likely to result in default. Lim owned 69 per cent of the Hong Kong unit’s shares as of April 3, according to data compiled by Bloomberg. Malaysia’s casino-to-hospitality conglomerate Genting and its units previously imposed its first group-wide salary cut since its founding in 1965.

“For Genting, the financial stress may push the owner to sell the asset, or liquidate the entire firm,” said Banny Lam, the head of research at CEB International Investment. “Liquidation is not very likely, but there is such a possibility if Lim doesn’t have money and cannot find a buyer for its assets. In that case, equity holders rank behind bond holders to get compensated.”

Genting Hong Kong shares were down 39 per cent to HK$0.30 at 3.40pm local time. Genting shares were untraded due to a public holiday in Malaysia. Genting Singapore fell 2.1 per cent.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x