Genting HK Receives Interest from Investors for Cruise Brand
(Bloomberg) -- Cruise ship operator Genting Hong Kong Ltd. has received indicative letters from private investors interested in investing in one of its cruise brands, the company said in a filing to the Hong Kong Stock Exchange dated Aug. 28.
The firm, controlled by Malaysian tycoon Lim Kok Thay, said “there is a reasonable prospect that the group will be able to obtain the funding” by June 2021. The company announced the development when reporting a wider first-half net loss of $687.1 million from $55.2 million a year ago.
Genting Hong Kong said earlier this month it has suspended all payments to creditors, blaming its cash crunch on the coronavirus pandemic. The company said it owed a total of $3.4 billion as of July 31. Its shares are down 58% this year, battered by lockdown measures and travel curbs across the globe. They climbed 1.6% as of 1:48 p.m. in Hong Kong, halting a four-day drop.
The company said it has “aggressively” cut non-essential operational expenses, enacted pay freezes or reductions and lowered headcount to conserve cash and minimize the monthly cash burn rate.
The cruise operator is also negotiating a further loan deferment of $97 million with lenders after it deferred $85 million from certain lenders before June 30 this year, according to the filing. Some of Genting Hong Kong’s creditors have formed an ad hoc group to discuss a restructuring solution with the company’s advisers.
The company said the majority of its capital commitments of about $1.3 billion as at June 30 will be delayed in view of suspended ship construction activities.
Genting Hong Kong said it expects its shipyard operations to resume in October. The company, which owns the MV Werften shipyards in Germany, said it is applying for long-term funding from the German government’s pandemic-related Economic Stabilization Fund for its shipyard operations.
These funds will be used to finance the working capital needs of the shipyards and on-going construction of new ships, it said. Upon completion of the new cruise ships, the group will be able to draw down project financing from the lenders, it said.
The company said there is “a reasonable prospect” that it will have sufficient working capital and cash flows to fulfill its financial obligations as and when they fall due in the 12 months till 30 June 2021, if it succeeds in implementing measures and plans including controlling capital expenditure and seeking fresh funding.
Genting Hong Kong suspended almost all of its cruise operations since February 2020 due to the coronavirus outbreak and expects them to resume in January 2021, the company said in the filing.
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