by Rachel Butt (Bloomberg) Lim Kok Thay, the former chairman of resort and cruise ship company Genting Hong Kong, which slipped into provisional liquidation last week, has accused the German government of shirking a promise to provide capital to the Genting shipbuilding unit, whose demise eventually forced the cruise ship operator to seek court assistance to protect its assets.
As part of a restructuring deal last year, the former German administration agreed to provide a $620 million line of credit to help MV Werften continue construction of a cruise ship called Global Dream, said Malaysian tycoon Lim in a letter dated January 24 and seen by Bloomberg News. But when the new German government took office in December, an alternative arrangement that Lim called “unreasonable” was offered and a personal guarantee was sought.
The new German government also did not allow Genting Hong Kong access to crucial cash deposits after Lim injected $30 million as a precondition. Lack of funds eventually forced the company to seek interim liquidation, Lim said in the letter.
“We have been placed in this position as a direct result of counterparties failing to meet their contractual commitments that many of you tirelessly negotiated as part of the June 2021 restructuring,” Lim and the former wrote. the company’s deputy general manager, Colin Au.
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In a statement on Friday, German government officials reiterated that they had done everything in their power to save the MV Werften. Earlier this month, Economy Minister Robert Habeck blamed Genting for the shipbuilder’s failure, saying the state had offered a 600 million euro ($670 million) loan to provided that Genting provides an additional 60 million euros plus guarantees for federal funds. Genting refused, Habeck said.
MV Werften is based in Mecklenburg-Western Pomerania, a relatively poor northern state where some 1,900 residents were employed by the shipbuilder.
The German government pledged to help maintain MV Werften’s operations during the pandemic through the Economic Stabilization Fund (ESF) last June, and made an offer of funding to complete construction of the Global Dream ship in October. , the German economy ministry said in the e-statement mailed on Friday.
“In order to fulfill its responsibility to the shipyard, the parent company Genting Hong Kong should have made an appropriate financial contribution to fill the short-term liquidity gap and secure the funding provided by the WSF,” according to the report. press release from the Ministry of the Economy to Bloomberg. “It is standard practice within the framework of the stabilization measures of the FSM that the owner makes his own contribution.”
Genting Hong Kong and Genting Bhd. declined to comment. Genting Bhd., Genting Singapore Ltd. and Genting Malaysia have no cross-shareholdings with Genting Hong Kong, except for billionaire Lim who is a common shareholder in all four.
Lim’s letter was sent to Credit Agricole SA, which then shared it with other banks in the lending syndicate, according to a person familiar with the matter who asked not to be identified as the details are private. A representative of Credit Agricole in Hong Kong declined to comment.
Genting Hong Kong became the world’s largest cruise operator to seek court assistance to protect its assets during the pandemic when it said on January 19 that it had deposit with the Supreme Court of Bermuda to appoint interim liquidators after exhausting “all reasonable efforts” to negotiate with creditors and stakeholders.
Dream Cruises, an indirect unit not wholly owned by Genting Hong Kong, filed for liquidation Jan. 27 in Bermuda, Genting said today. The company reported a record loss of $1.7 billion in May and warned it would run out of cash towards the end of that month.
Its cruises that depart from Hong Kong are suspended – although it has been before due to the city’s Covid restrictions – and bookings from Singapore have also ceased. Crystal Cruises, another brand it operates in the United States, has suspended sailings until May.
“Genting Hong Kong would have survived these aggravating Covid ‘black swan’ events had our contracting parties honored their obligations,” Lim said in the letter. He added that “the situation that the German authorities imposed on all of us was that we had to find large sums of fresh money during the Christmas and New Year period, which in retrospect was an impossible task” .
Lim and Au recently resigned from Genting Hong Kong. The letter indicated that it was a question of giving the provisional liquidators autonomy to work on the best solution for the company.
By Rachel Butt, K. Oanh Ha and Chanyaporn Chanjaroen, with help from Ravil Shirodkar and Arne Delfs. © 2022 Bloomberg L.P.