Trading in the shares of Genting Hong Kong were suspended on the Hong Kong Stock Exchange on 7 January at the company’s request, pending an announcement.
“At the request of Genting Hong Kong Limited (the “Company”), trading in the shares of the Company on The Stock Exchange of Hong Kong Limited will be halted with effect from 9:00 a.m. on Friday, 7 January 2022 pending the release of an announcement in relation to an inside information of the Company,” Genting Hong Kong said in a statement.
The company, which owns Dream Cruises and Star Cruises in Hong Kong and Crystal Cruises in Los Angeles, has recently issued a number of statements regarding its MV Werften shipbuilding subsidiary in Germany.
MV Werften’s finances in spotlight
On 2 January, it said that the Delta and Omicron COVID variants have impacted on the recovery of the Group’s cruise operations and to mitigate the risk of the Group breaching the Minimum Liquidity Covenant, the Group proposed to draw down on the loan facility provided by State M-V in the sum of $88,000,000 pursuant to the terms of the Backstop Facility Agreements.
M-V refers to the German state of Mecklenburg-Vorpommern, where the facilities of MV Weften are located.
Since 17 December 2021, the Company has satisfied all drawdown conditions under the State M-V Backstop Facility, including having obtained backstop funding of $30,000,000 from the company’s controlling shareholder Golden Hope Limited.
“Accordingly, on 17 December 2021, the company delivered a utilisation request under the State M-V Backstop Facility to State M-V in respect of the sum of US$88,000,000 in accordance with the Backstop Facility Agreements,” Genting Hong Kong said.
On 23 December 2021, Genting Hong Kong received correspondence from State M-V imposing additional pre-conditions to drawdown under the State M-V Backstop Facility not provided for under the terms and conditions set out in the Backstop Facility Agreements.
Legal proceedings against state
Accordingly, on 27 December 2021, the company applied to the District Court -Landgericht in German- of Schwerin to commence legal proceedings against State M-V seeking an interim injunction to require State M-V to comply with the terms and conditions of the Backstop Facility Agreements including to satisfy the utilisation request and permit drawdown under the State M-V Backstop Facility (the “Legal Proceedings”).
On 28 December 2021, the Court handed down its judgement and ordered State M-V to immediately fund in full the sum of $88,000,000 in accordance with the Backstop Facility Agreements. However, on 29 December 2021, the Court amended its order to limit the immediately enforceable payment amount to $6,300,000, with the balance of the contractual amount to be paid on a later date.
Further amendment, payment to be withheld until hearing
On 30 December 2021, the Court further amended its order such that no amount is immediately payable but that the matter is to be listed for hearing on 11 January 2022.
On 30 December 2021, State M-V released a press release1 stating that State M-V and the Finance Committee of the Parliament of State M-V still agree to make available the State M-V Backstop Facility but only if certain additional pre-conditions are met.
“These pre-conditions include further agreement from the German Federal Government and the Company with respect to certain terms of a bridge loan to MVWH, the Company’s subsidiary, to fund the ongoing costs of the construction of the “Global One” vessel. State M-V stated that such a negotiated solution remains its priority, and that it will continue in the coming days to negotiate,” Genting Hong Kong said.
Photo: the 208,000 gross ton Global Drama is currently under construction at MV Werften
