Genting HK Continues Offloading Assets as It Looks To Stay Afloat
Posted on: July 21, 2022, 07:14h.
Last updated on: July 25, 2022, 11:25h.
Genting Hong Kong has spent the past several months restructuring the business to avoid a permanent shutdown. It’s losing its casino cruise ships as a result, and just sold another to Royal Caribbean.
Poorly-timed spending that immediately preceded the onset of COVID-19 forced Genting HK into a bad spot. It started missing payments to its suppliers, which ultimately led to the seizure of a couple of ships and a filing for liquidation.
Fast-forward seven months, and the company continues to make changes. Royal Caribbean now purchased Crystal Endeavor for $275 million only a year after it splashed for Genting HK’s Genting Cruises. That figure, according to Genting HK, is well below what it spent to construct the vessel.
High Hopes on the High Seas
Royal Caribbean is financing the purchase through a 15-year unsecured loan with Euler Hermes, an export agency in Germany. That’s the same company that Genting HK accused of causing its demise following the denial of an insurance claim.
Crystal Endeavor will soon become Silver Endeavor, and will join Royal Caribbean’s Silversea Cruises fleet of ships next month. The company’s CEO, Jason Liberty, explained in a statement that it will be the fleet’s fourth ship since 2020, a strong indication of the company’s growth.
That growth reportedly came amid a downturn in the market. COVID-19 forced Royal Caribbean, Carnival Cruise Lines, and others operating out of the US to shut down completely from March 2020 to July 2021. In addition, Royal Caribbean lost at least one extension, a joint venture in Spain that had to declare bankruptcy.
Even when they resumed sailing, the companies initially operated at just 50% capacity. However, Royal Caribbean put more ships in the water more quickly around the world, allowing it to begin generating revenue. Now, after incurring a net loss for the first half of the year, the company sees a return to profitability in the second half.
Genting Reshaping Its Future
Unwilling to give up on its cruise dreams, Genting HK parent Genting Group brought to life Resorts World Cruises in April. That entity launched its first cruise last month.
At the same time, Genting HK continued to figure out where to make cuts to avoid a complete meltdown. For example, in June, the company sold its Star Cruises Jetty in Kedah, Malaysia. The jetty serves as a significant port of call for international cruises and can berth ships of up to 178 meters (583 feet).
Since then, Genting HK has made additional cuts in accordance with the instructions of appointed liquidators. It said this past Tuesday in a filing with the Hong Kong Stock Exchange that “various non-core subsidiaries” in Australia, Hong Kong, Malaysia, Singapore, and the US are conducting insolvency proceedings.
Genting HK didn’t specify which entities are involved. However, it explained that additional subsidiaries “will enter into formal insolvency processes as the group continues with its operations-reduction exercise and the disposal of its assets.”
As for the company’s cruise ambitions, they have been scuttled permanently, per the prognosis of the liquidators.