Global cruise ship operator Genting Hong Kong says it has now achieved consummation of agreements with creditors that will see the company granted new loans and extensions to maturities around its US$2.6 billion of debt.
The new agreements, comprising new facilities totalling US$700 million, recapitalisation of the group and extensions to its indebtedness, were originally announced in early May but remained subject to execution of long form documentation and satisfaction of certain commercial and legal conditions precedent.
Genting Hong Kong said overnight that it has been “working diligently towards achieving the consummation of the Transaction and … is pleased to announce that consummation of the Transaction has occurred on 28 June 2021.”
The agreements provide for, among other things, a €300 million grant from Germany’s Economic Stabilization Fund to help fund completion of a new cruise ship at Genting Hong Kong’s MV Werften shipyards; provision of a new €313.6 million financing facility by existing lenders in relation to another ship called Crystal Endeavor; maturity extended and interest margins reduced on group financial indebtedness of US$981 million; and amortization payments under US$1.5 billion of financing agreements entered into by Dream Cruises, Crystal Cruises and Star Cruises suspended for at least two years.
Financial covenant testing under the group’s existing financial arrangements have also been suspended.
The agreements relate to the group’s announcement in August 2020 that it was suspending all payments to financial creditors in order to preserve liquidity due to the impact of the COVID-19 pandemic on its businesses.
The company, which reported a US$1.72 billion loss for FY2020, said upon making its August announcement that it needed to use all “remaining available cash to maintain critical services for the group’s operations, and will endeavor to negotiate a holistic debt restructuring solution for the current financial indebtedness of the Group.”
Genting Hong Kong also provided a business update overnight in which it confirmed that cruise operations out of Taiwan remain suspended following a recent outbreak, with the Government having indicated that cruises can only resume when the current level 3 alert is lowered to level 2.
However, cruise capacity for the cruises out of Singapore have been increased from 25% to 50% as of 14 June 2021. The company is also preparing to launch cruises out of Hong Kong at the end of July.
“The Group is working actively to deploy passenger cruising opportunities across all potential routes, acknowledging that it may face unforeseen disruptions and incur additional start-up costs in this uncertain process,” Genting Hong Kong said.
“Meanwhile, the Board shall continue to closely monitor the Group’s liquidity position and to explore strategic options available to the Group to further improve the Group’s liquidity and competitive positions.”