Genting Hong Kong to suspend all payments to creditors as subsidiaries default on obligations

Genting Hong Kong has revealed it will temporarily suspend all payments to the group’s financial creditors, including interest and charter payments, in order to preserve liquidity amid growing COVID-19 pressures.

In an update on recent development, including ongoing disruptions to the global cruise ship industry which constitutes its primary business arm, Genting HK said it will instead use ”remaining available cash to maintain critical services for the group’s operations, and will endeavor to negotiate a holistic debt restructuring solution for the current financial indebtedness of the Group.”

Genting HK operates three cruise lines – Dream Cruises, Crystal Cruises and Star Cruises – as well as a shipbuilding operation at MV Werften shipyards in Germany. It is also a joint venture partner in Philippines IR Resorts World Manila and owns Zouk nightclub in Singapore.

The decision to suspend payments comes after two of the company’s subsidiaries – Dream Global One Limited and Dream Global Two Limited – this week failed to pay €3.7 million in bank fees, constituting an event of default.

“In addition to the events of default that have already occurred under Global Finance Documents, 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,” the company added.

“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. As of 31 July 2020, the outstanding financial indebtedness of the Group is at US$3.37 billion.”

In response, Genting HK said it plans to invite all creditors to a virtual meeting at which it will provide further information on the current status of the Group’s operations and finances, along with restructuring and refinancing options.

The company will also request that the creditors form a steering committee to evaluate the Group’s restructuring proposal and to agree on a holistic restructuring solution, to appoint legal and financial advisers, and to refrain from taking any enforcement action “so that the stakeholders of the Group can have a stable platform to negotiate and implement the restructuring.”

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