Hong Kong cruise ship owner suspends payments to creditors

KUALA LUMPUR: A cruise ship operator controlled by tycoon Lim Kok Thay plunged as much as 33% in Hong Kong after the company suspended all payments to creditors.

Genting Hong Kong Ltd said it would use its available funds to maintain critical services for the company’s operations and asked creditors to form a steering committee to evaluate a planned restructuring proposal, according to a statement to the Hong Kong stock exchange last night. The company owed a total of US$3.4 billion as of July 31, it said.

The firm, part of the Genting group, blamed the cash crunch on the coronavirus pandemic and said the payment halt would likely result in default.

Malaysia’s casino-to-hospitality conglomerate Genting Bhd and its units previously imposed its first group-wide salary cut since its founding in 1965. Lim owned 69% of the Hong Kong unit’s shares as of April 3, according to data compiled by Bloomberg.

“For Genting, the financial stress may push the owner to sell the asset, or liquidate the entire firm,” said Banny Lam, the head of research at CEB International Investment Corp.

“Liquidation is not very likely, but there is such a possibility if Lim doesn’t have money and can’t find a buyer for its assets. In that case, equity holders rank behind bond holders to get compensated.”

Genting Hong Kong shares were down a record 33% at 10.37am. Genting Bhd shares were untraded due to the public holiday. Genting Singapore Ltd fell 1.4%.

Genting Bhd operates casinos and resorts in Las Vegas and Singapore. It’s had to scale back operations as countries impose lockdowns, while consumers shun cruises after a few ships became sites of coronavirus outbreaks.

The conglomerate, founded in 1965, is also involved in property, plantation and energy sectors as well as life sciences.