Genting Hong Kong, the cruise shipping cruise ship building to resorts group, said it has decided to suspend payments to save cash as it is in the process to restructure its finances and raise fresh funds.
Meanwhile, two subsidiary companies of the group have defaulted on certain payments to banks while the suspension of payments could trigger more defaults, which again could allow creditors to declare all debt, totaling at US$3.37 billion, due and payable immediately, the company said.
Genting Hong Kong owns Dream Cruise, Star Cruises and Crystal Cruises plus the MV Weften shipbuilding company in Germany and a resort in the Philippines.
“As the Fund Raising Exercise may or may not be consummated, the Board wishes to announce that, it has, after careful consultation with its legal and financial advisers, concluded that in order to preserve as much liquidity of the Group as possible and to fulfill the Board’s fiduciary duties and to treat all its financial creditors fairly and equitably, the Company should temporarily suspend all payments to the Group’s financial creditors (including interest and charter payments),” Genting Hong Kong said in a statement.
“On 17 August 2020, Dream Global One Limited and Dream Global Two Limited (being subsidiaries of the Company, together the “Subsidiaries”) were required to pay certain fees amounting to approximately EUR 3.7 million (in aggregate) in connection with the financing of the construction of certain ships (the “Bank Fees”). The Company guarantees the obligations to pay the Bank Fees. As of the date of this announcement, the Bank Fees have not been paid. Such non-payment constitutes an event of default under the finance documents of the Subsidiaries (the “Global Finance Documents”),” the company continued.
In addition to the defaults that have already occurred under Global Finance Documents, the company said its 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. As of 31 July 2020, the outstanding financial indebtedness of the Group is at US$3.37 billion,” the company said.
The Genting Hong Kong board will meet on 28 August to approve the accounts for six months to 30 June 2020. The company has issued two profit warnings since March as the Covid-19 pandemic has forced it to suspend operations.
