MV Werften—the German cruise ship builder controlled by Malaysian billionaire Lim Kok Thay’s Genting Hong Kong—has filed for bankruptcy after failing to reach an agreement with the German government to support additional financing for a mega cruise ship the company is building for Genting Hong Kong.

As the travel industry grappled with the lingering impact of the Covid-19 pandemic, Genting Hong Kong sought 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 operator of Star Cruises said in a regulatory filing on Monday.

“The company understands that Euler Hermes’ refusal is based on a business review into the five-year outlook of the group prepared at the request of Euler Hermes which considered various stress scenarios affecting the group, including a persistent and sustained reduction in business activities as a result of Covid-19,” Genting Hong Kong said. Such a business review was not a pre-condition for Euler Hermes’ insurance coverage under the financing agreement, it added.

With the refusal of Euler Hermes to provide for insurance cover and the German government’s move to replace the financing facility with a new financing proposal that imposes additional conditions, Genting Hong Kong said its unit MV Werften filed for insolvency proceedings with the German courts on Monday.

The German government has blamed Genting for the collapse of the cruise ship builder, putting at risk some 2,000 jobs. An offer of aid was rejected by MV Werften’s owners, Economy Minister Robert Habeck was quoted by Bloomberg as saying in in an emailed statement.

MORE FOR YOU

The insolvency filing will trigger cross default events under Genting group’s financing arrangements that have an aggregate principal amount of $2.78 billion, the company said.

“The company considers that it has exhausted all reasonable efforts to negotiate with relevant counterparties under its financing arrangements,” Genting Hong Kong said. “If the group remains unable to meet its obligations to repay any debts as they fall due or to agree with its relevant creditors on the renewal or extension of its borrowings or any related alternative arrangements, there may be a material adverse effect on the group’s business, prospects, financial condition and operating results.”

Genting Hong Kong said its board is discussing potential financing options with its bankers, shareholders and partners in Dream Cruises Holding, an indirect wholly owned subsidiary of the company.

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.

Source: Forbes – Business

Leave a Reply

Your email address will not be published.

You May Also Like

Fauci: Herd Immunity Unreachable Unless Vaccine Hesitant Get The Jab Or Get Infected

Topline The U.S. will not be able to reach herd immunity against…

China Fines Alibaba Record $2.75bn for Anti-monopoly Violations

Chinese regulators have fined Alibaba Group Holding Ltd 18 billion yuan ($2.75…

Beware the crypto scammers: Fraudsters fleece British couple of £15k

A British couple lost £15,000 in cryptocurrency savings within minutes after scammers…

FCA sounds warning to new breed of thrill-seeking investors

Young people are being drawn to high-risk investing despite almost two thirds…