Genting Hong Kong, a holding company that operates three cruise brands – Star Cruises, Dream Cruises and Crystal Cruises – has missed a debt payment prompting fears that it could be the next cruise company to file for bankruptcy.
Owned by Malaysian tycoon, Lim Kok Thay, Genting, which also has interests in resorts and shipyards, missed debt repayments of some $4.3 million. It is reported to have outstandings debts of some $3.37 billion as of the end of July
In a filing with the Hong Kong Stock Exchange, blaming the COVID-19 pandemic and the resulting global suspension of sailings, the company said it was presently unable to meet its financial obligations right now, and was seeking to restructure its debt.
“The company’s remaining available cash will be reserved to maintain critical services for the group’s operations, while the company will endeavor to negotiate a holistic debt restructuring solution,” Genting HK said in the statement to the Hong Kong Stock Exchange.
It added that “the Board anticipates that the temporary suspension of all payments to the Group’s financial creditors will also likely result in events of default occurring under other finance documents of the Group. Such events of default would give rise to a right for requisite creditors of the Group to declare that the financial indebtedness owed to them are immediately due and payable.”
Genting HK – Luxury cruises and casinos
According to media reports, Genting HK has indicated that it will experience a financial shortfall of at least $600 million in the first half of 2020.
The Malaysia daily, The Star, reported that Lim Kok Thay has pledged nearly his entire share in the troubled cruise operator as collateral for loans after the stock plunged 38% on Thursday.
The Star said Lim Kok Thay’s fortune had declined from some $1.5 billion at the beginning of the year to some $700 million presently, excluding pledged shares.
In late July, Genting’s Dream Cruises relaunched operations out of Taiwan aboard the Explorer Dream, sailing two and three-night journeys out of Keeling, calling at Penghu, Matzu and Kinmen islands as part of its Taiwan “Island-Hopping” itineraries.
The crisis comes despite the Taiwan itineraries reportedly being fully booked.
Genting’s brands are Crystal Cruises, a luxury liner based out of the United States that operates ocean, river and yacht cruises; Dream Cruises, which operates four cruise ships aimed at the Asian market with onboard casinos; and Star Cruises, which also operates four ships aimed at the Asian market.
Cruise bankruptcies and scrapped ships
Genting is hardly the first cruise line to be severely affected by the global crisis.
In late July, British cruise line Cruise and Maritime Voyages was placed into receivership after failing to find financing.
In the same month, Sweden’s only cruise line Birka Cruises was shut down with the loss of over 500 jobs, while in late June, Spanish Cruise line Pullmantur filed for bankruptcy and its three-ship fleet, including the MS Sovereign, formerly Royal Caribbean’s Sovereign of the Seas, once the world’s largest cruise ship, was sent to a scrapyard in Turkey.