The Asia-based owner of Crystal Cruises has admitted that a fund raising exercise may be in doubt following two profit warnings.
Genting Hong Kong, which also runs Dream Cruises and Star Cruises, is to temporarily suspend all payments to creditors to preserve liquidity amid growing Covid-19 pressures.
The group revealed debts of $3.37 billion as of July 31 in an update to the Hong Kong Stock Exchange.
Two subsidiaries involved in building two new ships, Dream Global One and Two, defaulted on a €3.7 million payment in connection with the financing of the construction earlier this week, Genting disclosed.
A report by funding advisors delivered on Wednesday said that “potential interested parties will require more time to assess the provision of additional funding to the group”.
Genting added: “There is currently a lack of certainty as to the outcome of the fund raising exercise.
“As the fund raising exercise may or may not be consummated, the board wishes to announce that, it has, after careful consultation with its legal and financial advisers, concluded that in order to preserve as much liquidity of the group as possible and to fulfil the board’s fiduciary duties and to treat all its financial creditors fairly and equitably, the company should temporarily suspend all payments to the group’s financial creditors, including interest and charter payments.
“The company’s remaining available cash will be reserved to maintain critical services for the group’s operations.”
Genting “will endeavour to negotiate a holistic debt restructuring solution for the current financial indebtedness of the group and continue to engage with interested parties identified by the funding advisors”.
“The Covid-19 pandemic has had and will continue to have a material impact on the financial position and results of operation of the group,” Genting said in its latest financial update.
Trading in the company’s shares was temporarily suspended pending the release of the announcement
Creditors have been summoned to a virtual meeting “as soon as practicable” where further information will be provided on the status of the group’s operations and finances, “along with restructuring and/or refinancing options in respect of the group’s financial indebtedness”.
Financial creditors “will be asked to refrain from taking any enforcement action so that the stakeholders of the group can have a stable platform to negotiate and implement the restructuring”.