Posted on: January 11, 2022, 10:45h.
Last updated on: January 11, 2022, 01:32h.
Genting Group has weathered a number of storms the past couple of years. But one business unit is in trouble. Plans for its Genting Hong Kong arm to offer casino cruises could be dropped due to a subsidiary’s financial collapse.
Genting Hong Kong had its eye on a unique market a couple of years ago. It would introduce casino cruises that would revolutionize the seagoing gaming experience. It was so dedicated to the concept that it even bought a shipyard to build its vessels, Germany-based MV Werften Holdings Ltd (MVWH).
The company was successful in launching a couple of ships, but disaster then struck. The COVID-19 global pandemic arrived, throwing the operations into turmoil. Now, MVWH is in serious financial trouble, being sucked into a whirlpool it can’t escape.
Genting Hong Kong Subsidiaries Sinking
MVWH has had to request bankruptcy protection. The move comes after the company wasn’t able to secure assistance from Germany as it sought US$88 million to keep it afloat. Another shipbuilding operation owned by Genting Hong Kong, Lloyd-Werft in Bremerhaven is also reportedly on the edge of collapse.
Subject to the outcome of the hearing of the Company’s application on 11 January 2022 … there is no guarantee that the Group will be able to meet its financial obligations under its financing arrangements as and when they fall due,” Genting Hong Kong warns in a Hong Kong Stock Exchange filing.
All of this means even bigger problems for Genting Hong Kong. It filed a notice with the Hong Kong Stock Exchange, explaining that the insolvencies could lead to massive losses. Ultimately, it could mean the company defaults on outstanding debt of around US$2.78 billion.
The fault, in addition to the absence of government assistance, lies with an insurance carrier. Genting Hong Kong asserts that credit insurance agency Euler Hermes gave it a bad review, pushing the company into a corner.
It said the review results were not “fair and reasonable,” adding that Euler Hermes denied it coverage even though Genting Hong Kong had already paid an insurance premium.
Germany Blames Genting Group
The blame game has begun, but Germany says Genting is at fault. The Associated Press reports that Germany was willing to help the company avoid bankruptcy. However, Genting wasn’t willing to participate.
Germany reportedly put a €600 million (US$678 million) bailout plan on the table. The plan requested a 10% contribution from Genting, which it allegedly refused.
The German government did everything to prevent the insolvency of MV Werften and thereby save jobs,” Germany’s Economy Minister, Robert Habeck, said. “However, the owners rejected our offer of help; the bankruptcy application is the result.”
Genting Hong Kong has experienced significant financial setbacks for the past couple of years. It has credit lines that could have been accessed, but missed payments on previous obligations led to rejections.
The company reported a loss of US$1.72 billion for the 2020 fiscal year. It also reported a loss of US$283.3 million for the first six months of last year.