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Genting Hong Kong is seeking liquidation in the middle of a German lawsuit

Hong Kong's skyline from aboard the Genting Cruise Line's Genting Dream as it docked in Hong Kong on Wednesday, July 28, 2021.

Lam Yik | Bloomberg | Getty Images

Cruise operator Genting Hong Kong said on Wednesday that it has applied to liquidate the company as its liquidity is set to run out in late January.

It comes on the heels of warnings last week from the company that it could face potential cross-compliance on $ 2.8 billion financing schemes due to the insolvency of its German shipbuilding subsidiary MV Werften.

In an application to the Hong Kong Stock Exchange on Wednesday, Genting said the company "will immediately be unable to pay its debt as they fall due," as liquidity dries up.

The combated cruise operator said it filed for liquidation at the Supreme Court of Bermuda after the company "exhausted all reasonable efforts to negotiate with the relevant counterparties under its financing arrangements."

Genting Hong Kong is part of a larger conglomerate that also includes Genting Malaysia and Genting Singapore. Among its assets, the conglomerate Resorts World owns the leisure park chain, which includes those in Singapore, New York City and the United Kingdom. It also has 30 casinos across the UK

The company, which is controlled by Malaysian tycoon Lim Kok Thay, has been hit hard by the Covid-19 pandemic as travel stalled.

Trading in Genting Hong Kong shares was suspended on Tuesday and will remain halted for the time being, the company said.

Genting shares in Malaysia and Singapore were still trading on Wednesday. Genting Singapore shares rose 0.64% and Malaysian shares fell 1.72%

Legal battle in Germany

Genting Hong Kong was in the middle of a lawsuit with a regional government in Germany for pulling a $ 88 million backstop facility - or backup funding for a secondary repayment source - related to MV Werften.

But in a decision this week, the German state of Mecklenburg-Western Pomerania rejected Ghent's application for access to $ 88 million, according to Ghent's filing earlier this week.

"The company and group have no access to additional liquidity under any of the group's debt documents, and the company's available cash holdings are expected to expire in or around the end of January 2022, according to the company's cash flow forecasts," Genting said on Wednesday.

It said it had asked the court to appoint temporary liquidators and had also sought to give the liquidators permission to carry out the company's debt restructuring.

The company reported a net loss of $ 238 million for the period ending June 2021, compared to a loss of $ 742.6 million for the same period in 2020. Genting Hong Kong halted debt payments of nearly $ 3.4 billion by 2020, according to news reports.

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