Billionaire Lim Kok Thay’s Genting HK May File For Liquidation After Court Rejects Funding Request

Genting Hong Kong—the cruise ship operator controlled by Malaysian billionaire Lim Kok Thay—said it is considering filing for liquidation after a German court denied its request for the release of $88 million in funding for its Germany-based shipyard unit MV Werften.

“Unless the company receives credible proposals for a solvent, consensual and inter-conditional restructuring solution, the board will potentially proceed with a filing of provisional liquidation of the company with the competent court of Bermuda on 18 January 2022,” the company said Tuesday in a regulatory filing in Hong Kong. “The appointment of provisional liquidators is essential and in the interests of the company, its shareholders and its creditors to maximize the chance of success of the financial restructuring and to provide a moratorium on claims and to seek to avoid a disorderly liquidation of the company by any creditors.”

The potential liquidation of the owner of Star Cruises comes a week after MV Werften filed for insolvency in German courts as the cruise ship builder failed to get government support to fund a mega cruise ship the company is building for its parent Genting Hong Kong. The insolvency filing will trigger cross default events under Genting group’s financing arrangements amounting to $2.78 billion, the company said last week.

Genting Hong Kong said its inability to access funding from the backstop funding facility in Germany “has further impacted the group’s ability to meet its financial obligations under its financing arrangements as and when they fall due.”

As the travel industry continues to grapple with the lingering impact of the Covid-19 pandemic, Genting Hong Kong had to seek additional financing to complete the construction of the 342-meter-long cruise ship, dubbed the Global Dream, which could accommodate as many as 9,500 passengers. While agreements were secured with creditors in June 2021, Euler Hermes, the German government’s export credit insurance agency, refused to confirm the insurance coverage for the funding facility, preventing creditors from disbursing the loan in December, the company said last week.

The pandemic has upended the tourism industry as governments around the world implemented lockdowns and restricted travel to contain the spread of the virus. While there are early signs of a recovery and pent-up demand in the leisure travel market, uncertainties prevail amid a renewed spike in Covid-19 infections caused by the Omicron variant.

The lingering impact of the pandemic has deepened Genting Hong Kong’s losses, which tripled to $743 million in the first half of 2021 from $238 million the previous year.

Besides the cruise business, Lim owns stakes in casino resorts across Singapore, Malaysia, the Philippines and the U.S. With a net worth of $2.6 billion, he was ranked No. 11 on the list of Malaysia’s 50 Richest that was published in June.