Friday 29 Mar 2024
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KUALA LUMPUR (Oct 7): Cruise ship operator Genting Hong Kong Ltd (Genting HK) has applied for €570 million (about RM2.78 billion) from Germany's coronavirus stabilisation fund — the largest publicly known such request by a foreign company to support the firm’s struggling shipyards in the country, despite reservations over state handouts to foreign investors, Nikkei Asia reported. 

Nikkei Asia reported yesterday that for now Genting HK is to get an initial sum of €193 million from Germany's government. 

"The payment to the operator of the Star Cruises, Dream Cruises and Crystal Cruises lines will allow work at its shipyards in northeastern Germany, grouped under MV Werften, to carry on at least until March,” Nikkei Asia reported, quoting Harry Glawe, economic minister of Mecklenburg-West Pomerania, the state where MV Werften is located.

"We have clearly made headway. The federal government is bailing out MV Werften,” Glawe was quoted as saying.

At the time of writing this theedgemarkets.com report today, Hong Kong-listed Genting HK has not made any bourse filings on the reported funding from Germany's coronavirus stabilisation fund.

Nikkei Asia reported that Genting HK bought MV Werften in 2016 and that the global shipbuilding sector has been among those worst hit by the coronavirus pandemic, darkening the prospects for MV Werften's 3,100 workers.

It was reported that MV Werften has been building three ships for Genting — the Crystal Endeavor, which was due to be delivered this summer, as well as the Global Dream and the Global 2, due for completion in 2021 and 2022, respectively. It was reported that in August 2020, Genting warned that the deliveries would be delayed by about a year.

"In August (2020), Genting HK froze payments to creditors and said it was seeking a debt restructuring.

"The German government created the fund to try to preserve jobs through the pandemic. But payments to foreign companies such as Genting (HK) have proved contentious, reflecting a fear that taxpayer handouts to foreign investors would flow abroad rather than benefiting German workers,” Nikkei Asia reported.

It was reported that part of the original rationale for the fund was to make cash-strapped German companies less vulnerable to being bought out by Asian rivals.

Otto Fricke, a German parliamentarian of the opposition Free Democratic Party who serves on the Bundestag's budget committee, was quoted as saying: "Decisions on state aid are particularly difficult when they involve foreign parent companies, as it is not easy to interfere with foreign parent companies' cash management to ensure that funds do not flow abroad."

"But Genting (HK) no doubt enjoys enormous leverage, given that we acknowledge the necessity of bringing its many highly qualified German workers as well as its massive local tech supply chain through the crisis," he said.

At the Hong Kong bourse today, Genting HK shares were unchanged at HK$0.26 at the time of writing for a market value of HK$2.16 billion. The stock saw 2.48 million shares traded.

Edited ByChong Jin Hun
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