Troubled cruise ship operator Genting Hong Kong is in talks with the German government over a possible US$600 million rescue package to save its MV Werften shipyard group from insolvency.
The package, if agreed, would help continue cruise ship construction projects at three shipyards under MV Werften’s watch and prevent up to 3,000 employees from losing their jobs, according to a report by The Maritime Executive.
Genting Hong Kong acquired MV Werften in 2016 in order to advance construction of cruise ships for its Crystal Cruises and Dream Cruises cruise lines. However, Genting Group’s Hong Kong-based subsidiary has been particularly hard hit by the COVID-19 pandemic, announcing last August that it was temporarily suspending all payments to the group’s financial creditors, including interest and charter payments, in order to preserve liquidity amid growing COVID-19 pressures. The company had debts at the time totaling almost US$3.4 billion.
The challenge of keeping its German shipyards afloat during the pandemic has already seen German authorities provide substantial assistance via a US$227 million bridging loan in October and another US$65 million grant earlier this year to save it from insolvency.
However, following a meeting late last week, the Minister for Economics in Mecklenburg-Vorpommern said the government was focused on providing additional financing to maintain employment at the shipyards via construction of two ships for the Dream Cruises brand.
Such funding is unlikely to save a fourth operation, the Lloyd Werft shipyard, from being shut down. Also acquired by Genting HK in 2016, Lloyd Werft is primarily focused on cruise ship repairs and the construction of luxury yachts but has reported a lack of work given the absence of cruising globally since early 2020.
Genting Hong Kong most recently reported a consolidated net loss of US$742.6 million for the six months to 30 June 2020.