(Bloomberg) — Genting Hong Kong, the troubled cruise operator controlled by Malaysian tycoon Lim Kok Thay, warned Tuesday of more defaults due to the insolvency of its German shipbuilding subsidiary.
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The company “considers that it has exhausted all reasonable efforts” to negotiate with counter-parties under the current financing arrangements, it said in a filing to the Hong Kong stock exchange.
That came after MV Werften, an indirect wholly-owned subsidiary, filed for insolvency on Monday to a local court in Germany, as salvage talks between the local governments and Genting came to a dead end. Potential cross defaults arising from that insolvency could amount to $2.78 billion, and relevant creditors affected “may have the right” to either demand payment or take actions regarding the financing terms, Genting said.
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The cruise operator’s financial health rapidly deteriorated after the Covid-19 pandemic prompted a string of restrictions that have led to restructurings and insolvencies at travel industry companies around the world. Genting Hong Kong halted debt payments to creditors totaling $3.4 billion in August 2020 and was in default of that amount as of Dec. 31 that year. The firm, which has offered “seacations” amid a global cruise-to-nowhere trend, reported a record loss of $1.7 billion last May.
In its filing Tuesday, Genting Hong Kong said that the board is in discussion with bankers, shareholder partners in Dream Cruises Holding and professional advisers to evaluate available options.
Shares of the company have been suspended from trading since Jan. 7 until further notice.
Germany’s federal government has blamed Genting Hong Kong for MV Werften’s insolvency and 1,900 jobs lost as a result, saying that an offer of aid was turned down by the company.
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