The company behind the biggest cruise operator in Asia has filed for a close of business with the Bermuda Supreme Court. Genting Hong Kong, the company that runs Star Cruises; Crystal Cruises; Dream Cruises; and shipyard MV Werften in Germany, says cash levels are at a point where it will run out by the end of January.
News had come out in the last weeks that Genting would default on $2.8 billion on financing arrangements, mainly due to the insolvency of German shipbuilding subsidiary MV Werften. As cash runs out, it could be the end for several cruise lines as the company warns that most operations could cease to exist.
Genting Unable to Pay off Debts
Genting filed for business closure, or winding up, to the Bermuda Supreme Court on Tuesday. It also asked the courts to appoint liquidators and propose plans to restructure the battered company.
This could include a disposal of assets, which include ultra-luxury cruise operator Crystal Cruises; mega cruise ships sailing under Dream Cruises; Star Cruises, which is well known for its popular short cruises from Hong Kong featuring large casino’s; and a shipyard in German, MV Werften, where Dream Cruises newest 9,500-passenger Global Dream is under construction.
Genting Hong Kong is expected to default on its debt payments due to a lack of cash balances, and the company has been unable to secure new funding. If the Bermuda Supreme Court does allow for a windup, the vast majority of operations would be discontinued. However, the group also announced that some activities in the Dream Cruises holding would continue:
“Certain business activities of the group, including but not limited to the operations of cruise lines by Dream Cruises Holding Limited, shall continue in order to preserve and protect the core assets and maintain the value of the group; however it is anticipated that majority of the group’s existing operations will cease to operate.”
Problems started for Genting Hong earlier this month. Due to the impact of COVID-19, Genting had been actively seeking financing to complete the construction of its newest ship. The 9,500-passenger Global Dream has been under construction at MV Werften. Genting secured an agreement for $88 million on backup funding; however, the German federal state of Mecklenburg-Vorpommern halted the deal.
Genting said Wednesday: “The Company and the Group have no access to any further liquidity under any of Group’s debt documents and the Company’s available cash balances are expected to run out on or around end of January 2022 according to the Company’s cashflow forecasts,”
What’s in Store For Crystal, Dream, and Star Cruises?
The future of the three cruise lines operating under Genting Hong Kong is uncertain at best. Although the company said some parts would continue to operate, it is unclear which assets that includes.
The news doesn’t come as a surprise. Back in August of 2020, Crystal Cruises issued a statement that addressed concerns over Genting’s financial status:
“Genting Hong Kong is engaged in a financial restructuring and fundraising exercise to address liquidity issues that resulted from its ships not operating because of COVID-19. It is important to understand that the company is not going out of business.“
“Whatever option our parent company pursues, it will allow Crystal to operate its business. Additionally, we have always been committed to honoring our contractual obligations with guests and travel partners, including the processing of refunds.”
At the time, the state of Genting Hong Kong was much more favorable than it is now. With liquidators and a windup of business, the prospects for the three cruise lines, as well as a multitude of resorts and casinos worldwide, hang in the balance.
Genting Hong Kong is a part of the Malaysian billionaire Lim Kok Thay’s casino, resort, and cruise empire. Lim Kok Thay and his family own 75.5% of Genting Hong Kong and 43% of Malaysian Genting Bhd.