Genting Hong Kong’s wholly-owned ship-building subsidiary MV Werften Holdings Ltd (MVWH) is reportedly on the brink of bankruptcy after authorities in Germany stalled on a promise to provide financial assistance.
According to a report by The Maritime Executive, MVWH management informed workers at the company’s three German shipyards on Friday that their monthly pay had been delayed due to complications around loan covenants – understood to be part of a recapitalization Genting Hong Kong has undertaken since defaulting on loan payments in 2020.
A company spokesman stated that although it currently has around US$34 million in liquidity available to make the payments, “there are legal frameworks under which we were not able to pay the wages today,” the report said.
However, The Maritime Executive also claims that MV Werften is set to be declared insolvent and its shipyards shut down permanently with a number of prospective buyers of the sites already making their interest known.
While there has not yet been any news from Genting Hong Kong on the matter, the company halted trading in its shares on the Hong Kong Stock Exchange on Friday “pending the release of an announcement in relation to an inside information of the Company.”
Genting Hong Kong, which revealed 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, announced in June 2021 that it had finalized a series of agreements with those creditors for the granting new loans and extensions to maturities related to US$2.6 billion of debt.
Among the agreements was a €300 million (US$340 million) grant from Germany’s Economic Stabilization Fund to help fund completion of a new cruise ship, Global Dream, at the MV Werften shipyards.
However, when the company attempted to draw down US$88 million of the grant in mid-December it was informed by authorities that it had not met conditions required to access the loan. A court hearing on the matter is scheduled to take place this Tuesday 11 January.
Genting Hong Kong reported a US$283.3 million loss for the six months to 30 June 2021, coming off a US$1.72 billion loss in FY2020.