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
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.
“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.
Malayan Banking and RHB Bank were the biggest contributors to Genting Hong Kong’s syndicated loans, according to data compiled by Bloomberg based on disclosed allocations at signing.
Genting Hong Kong was formerly known as Star Cruises, and operates the Star Cruises, Dream Cruises and Crystal Cruises lines. Back in February, passengers on the World Dream vessel were quarantined in Hong Kong after positive coronavirus cases were found on the ship.
Cruise ships lose value as coronavirus pandemic idles global industry
The industry has been battered by lockdown measures and travel curbs across the globe. Hong Kong has barred non-residents from entering the city since March, while residents returning from abroad have to quarantine for two weeks.
Lim’s Genting operates casinos and resorts in Las Vegas and Singapore. It’s had to scale back operations as countries impose lockdowns, while consumers shun cruises after a few ships became sites of coronavirus outbreaks. The conglomerate, founded in Malaysia in 1965, is also involved in property, plantation and energy sectors as well as life sciences.
The Resorts World Las Vegas US$1 billion 2029 bonds dropped 6.4 cents to 93.5 cents on the dollar, poised for the largest decline since April, according to Bloomberg-compiled prices. Resorts World Las Vegas is a wholly-owned indirect subsidiary of Genting and the latter is the keepwell provider for the securities.