Genting Hong Kong, the group behind Dream Cruises, Star Cruises & Crystal Cruises has suspended all payments to creditors, as the company enters a financial crisis.
As of 31 July, the company owed $3.4 billion as Genting HK looks to reduce costs, and conserve cash. Citing impact on it operations due to COVID-19, the announcement saw a 37.5% drop in the company’s share price.
Last week, its Dream Cruises brand were required to pay €3.7m in bank fees, in connection with financing the construction of new vessels. These fees were not paid.
The 208,000 GT Global Dream cruise ship is currently under construction and steel-cutting on a 9,500-passenger sister ship has started at the MV Werften shipyard in Germany, which is also owned by Genting Hong Kong. In March, all construction work stopped due to lack of funding. The shipyard hopes to receive €570 funds from Germany’s Economic Stabilization Fund.
At the start of August, Genting Hong Kong announced it would delay the delivery of Crystal Endeavor and Global Dream by “about a year,” due to the shutdown at MV Werften. Crystal Endeavour was originally set to be delivered in summer 2020, but was then also delayed to November 2020.
German sources suggest the Global Dream could be discontinued and dismantled – if the shipyard funding falls through – and sections of the second Global-class ship could be scrapped to pay off debts.
Company founder and main shareholder Tan Sri Lim Kok Thay has sold almost all of his 76% shares as collateral for loans.
‘The Group has undertaken a number of cost reduction and cash conservation measures to mitigate the effects of the resultant loss of revenues from its operations,’ the company statement said.
Crystal Cruises were quick to reassure that the latest financial announcement does not affect the luxury cruise line’s operations, stating: “It is important to understand that the company is not going out of business. Whatever option our parent company pursues, it will allow Crystal to operate its business. Additionally, we have always been committed to honoring our contractual obligations with guests and travel partners, including the processing of refunds.
“While we have extended our suspension of global voyages until the end of the year, we are working with government and health authorities in our key markets to resume sailing when it is safe to do so and we look forward to welcoming our guests back on board at that time.”
In the coming weeks, Genting Hong Kong intends to invite all of the Group’s financial creditors to a virtual meeting, where Tan Sri Lim Kok Thay’s management plans to disclose information about the current status of the group.