Genting HK to raise US$154m of additional liquidity, restate US$2.6b debt to tackle Covid-19 hit

Genting HK to raise US$154m of additional liquidity, restate US$2.6b debt to tackle Covid-19 hit
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KUALA LUMPUR (May 8): Genting Hong Kong Ltd (Genting HK) said it will seek to raise at least US$154 million (about RM633.37 million) of additional liquidity by Dec 31, 2021 pursuant to the terms of the group’s proposed recapitalisation and planned restatement of its financial indebtedness of about US$2.6 billion as the company contends with the impact of the Covid-19 pandemic.

Should Genting HK and its subsidiaries be unsuccessful in raising the additional liquidity, the cruise ship operator will pursue additional liquidity-raising transactions including an equity financing of the company for a value of not less than US$30 million, Genting HK chairman and chief executive officer Tan Sri Lim Kok Thay said in a filing with The Stock Exchange of Hong Kong Ltd yesterday.

"The board of directors of the company is pleased to announce that as at May 7, 2021, the company’s relevant financial creditors, partners and other stakeholders have provided their formal written agreement (subject to final credit committee and other relevant internal approval processes with respect to certain creditors and other stakeholders) in connection with term sheets which outline the key terms of a holistic, solvent, amendment and restatement of the group’s financial indebtedness and recapitalisation transaction (collectively referred to as transaction).

"The transaction is expected to be implemented as soon as practicable within the coming months following execution of long form documentation and satisfaction of certain commercial and legal conditions precedent specified therein.

"The transaction provides further capital and stability to the group in order to create a stable runway to execute a fully-funded business plan aligned with anticipated market recovery as Covid-19 restrictions ease,” Lim said.

According to him, key terms of the transaction include a full reset of Genting HK's existing financial covenants with effect from June 29, 2023 to reflect appropriate ratios for the purposes of facilitating a fully-funded business plan aligned with anticipated market recovery.

He said key terms of the transaction include a new €300 million funding which will be provided by the German Economic Stabilisation Fund to Genting HK’s indirect wholly-owned subsidiary MV Werften Holdings Ltd (MVWH) to fund the completion of the partially completed Crystal Endeavor and Global Dream vessels and certain overhead costs.

According to Lim, the €300 million funding will be guaranteed by Genting HK and certain wholly-owned subsidiaries of MVWH.

"As explained in the announcements of the company on March 13, 2020, March 24, 2020, Aug 3, 2020, Aug 7, 2020 and Aug 19, 2020, the Covid-19 pandemic has had, and continues to have, a material impact on the financial position and results of operation of the group.

"As disclosed in the company’s announcement of Aug 19, 2020, the company has been engaged for a significant period of time in intensive negotiations with its stakeholders to achieve a holistic, solvent, amendment and restatement of the group’s financial indebtedness and recapitalisation transaction,” Lim said.

He said implementation of the transaction is conditional upon execution by all relevant parties of definitive documentation and satisfaction of certain commercial and legal conditions precedent. 

"The company and its advisers are working diligently towards the implementation and consummation of the transaction as soon as practicable and will continue to keep the company’s shareholders, creditors, other stakeholders and potential investors updated by way of further announcement(s) as and when appropriate,” said Lim.

Lim owned a 75.55% combined direct and indirect stake in Genting HK as at Dec 31, 2019, according to the company’s latest annual report.

On The Stock Exchange of Hong Kong yesterday, Genting HK’s share price closed unchanged at HK$0.53 for a market value of about HK$4.496 billion.