Wed. Jan 26th, 2022


Shares in Genting Hong Kong lost more than half their value on Thursday after the company, which owns a vessel builder in Germany, issued a severe financial warning.

Genting Hong Kong is majority controlled by Malaysian tycoon Lim Kok Thay, whose conglomerate owns casinos in the United Kingdom and Southeast Asia.

The company’s German shipbuilder MV Werften filed for insolvency on Monday and threatened to cause cross-payments at Genting Hong Kong and its subsidiaries on liabilities with principal payments totaling nearly $ 2.8 billion, Genting said in a filing.

The Malaysian-owned company was in a dispute with German authorities over the collapse of MV Werften after talks to save the company ended this week.

Genting said his ability to financial obligations depends on strained loan negotiations with a German state entity over the collapse of the shipbuilder, with 1,900 jobs at stake.

The group is claiming the right to a $ 88m repatriation facility from the German state of Mecklenburg-Vorpommern. Genting said if it is not received, there is “no guarantee that the group will be able to meet its financial obligations under its financing arrangements as and when it is due”.

The group’s shares listed in Hong Kong fell as much as 56 percent on Thursday when they traded after a suspension of court proceedings over the German loan facility. The verdict is expected Monday, Genting said.

The company said no creditors have yet claimed early repayment due to the cross-payments caused by the insolvency applications of the shipbuilding unit. It was unclear whether they would do so.

Jason Yap of Logos Advisors, who published on the Smartkarma platform, said there may have been some overreaction in the market, explaining that creditors may be eager to avoid a default.

“If you accept that you were a large creditor, you may want to wait for the [court] heard . . . and you will weigh the cost of alternative actions, ”he told the Financial Times.

“It’s not the best way to do things, [creditors] may be forced to liquidate assets and must take control of vessels that may not be used highly in the Covid area. ”

Genting Hong Kong, which is listed in the Chinese territory, is part of the same group as the Malaysian-listed Genting Berhad, but Lim holds 76 percent of the shares.

The company also operated “cruises to nowhere” from Hong Kong, where residents’ travel options were limited by the city’s “zero-covid” strategy.

But a recent outbreak has led the Hong Kong government to reintroduce social margins and suspend cruises.

Yap said that along with the $ 88 million pending loan facility, the Hong Kong cruise suspension exacerbated the company’s misery.

“Despite whether [creditors] enforce [the] “$ 2.8 billion, the fact that financing is no longer available, could increase pressure on liquidity,” he said.

Shares in Genting Hong Kong closed 56.2 percent lower, at HK $ 0.32 per share.



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