A subsidiary of Genting Group, once Asia's No. 1 gaming company, is facing a liquidity crisis.
On January 19, Genting Hong Kong Co., Ltd. (Genting Hong Kong, 00678.HK), one of the main industries of the "Malaysian gambling king" Lin Wutong's family, which owns several well-known cruise brands, announced that in view of the company's financial situation, its On January 18, 2022 (Bermuda time), a winding-up petition and application for the appointment of Provisional Liquidators (JPLs) were filed with the Supreme Court of Bermuda.
Meanwhile, trading in Genting Hong Kong has been suspended since 9:00 am on January 18 and will continue to be suspended until further notice.
The company expects the Bermuda Court to hear an ex parte hearing on the petition and the JPL application on January 20 at 2:30 p.m. (Bermuda time).
Genting Hong Kong stated that it has made every reasonable effort to negotiate with the relevant counterparties under its financing arrangements.
As of the announcement date, despite such efforts and lengthy negotiations with creditors and other stakeholders, no definitive agreement has been reached between the parties on solvency, a consensus and mutually conditional restructuring solution.
Genting Hong Kong, formerly known as Star Cruises Co., Ltd., was established in November 1993 and headquartered in Hong Kong. It is an enterprise integrating global leisure, entertainment, tourism and hotel services. Its core business covers land and sea tourism, including Genting Cruises, Star Cruises, Dream Cruises and Crystal Cruises; Germany's MVWerften and LloydWerft shipyards, and the joint venture integrated resort project Resorts World Manila.
Genting Hong Kong has offices in more than 20 locations around the world, including Australia, China, Germany, India, Indonesia, Japan, Malaysia, the Netherlands, the Philippines, Singapore, Sweden and the United States.
Its German MV Shipbuilding Group files for bankruptcy, triggering a $2.777 billion financing default
On January 17, before the suspension, Genting Hong Kong closed at HK$0.415.
However, on January 13, Genting Hong Kong fell by 56.16% to close at HK$0.32, the lowest share price since the opening of the Year of the Bull on February 16, 2021, a drop of 71.9% from the closing price of HK$1.14 on November 22, 2021 .
The reason is that on January 11, the German MV shipbuilding group MV Werften Holdings Limited (MVWH), a subsidiary of Genting Hong Kong, on January 10, 2022 (German time), in the absence of any possible access to additional funding, MVWH and certain of its subsidiaries Application for bankruptcy proceedings to the competent German court (MVWH bankruptcy application).
The MVWH bankruptcy filing by MVWH will trigger an event of default under the Global1 financing agreement and will trigger a cross-default under certain financing arrangements in Genting Hong Kong with an aggregate principal amount of approximately US$2.777 billion.
According to the official website, in 2016, Genting Hong Kong merged its three shipyards in Wismar, Rostock and Stralsund, Germany, to form the German MV Shipbuilding Group, together with the specialized construction of large yachts and other new ships acquired in 2015. Lloyd Werft shipyard, with its three cruise brands, realizes global expansion plans.
The combined German MV Shipbuilding Group has 1,800 experienced employees and specialists and is capable of building large cruise ships with complete and state-of-the-art facilities.
In fact, Germany's MV Shipbuilding Group has been contributing revenue to Genting Hong Kong's cruise business from 2017 to 2019.
In the following year after the reorganization, the revenue of cruise tourism and cruise tourism related business increased by 11.9% from USD 908.1 million in 2016 to USD 1.016 billion in 2017; $786 million, due to a 33.7% increase in passenger cruise days.
The increase in the number of cruise days was mainly due to the inclusion of the full-year operations of Genting Dream and Crystal Mozart, as well as the launch of World Dream, Crystal Bach and Crystal Mahler in 2017 number".
At the same time, revenue from the shipyard business and non-cruise tourism business from external customers increased by 60.6% to US$174 million in 2017 from US$108.6 million in 2016, mainly from its shipyard business and the sale of residential property units in Mainland China revenue contribution.
However, the global spread of the new crown epidemic has caused the construction of cruise ships to be suspended.
The 2020 annual report shows that the 2019 novel coronavirus disease epidemic has caused the cruise tourism business to be suspended since February 2020. At the same time, due to the closed border in Germany, non-German subcontractors have to send their employees home. As a result, three shipyards were closed in March 2020. Operations will be suspended from January to October.
2020年，云顶香港收益总额由2019年的15.609亿美元减少至3.668亿美元，经扣除折旧及摊销成本后，2020年的经营亏损为6.102亿美元。截至2020年底，该公司贷款及借款总额为33.841亿美元，负债净额状况为31.414亿美元。
云顶香港管理层减薪20%至50%，裁员57%
为舒缓情况，包括云顶香港主席兼行政总裁林国泰、副主席、副行政总裁及董事不收取由2020年2月起至年底的酬金，管理人员减薪20%至50%，并获90%管理人员响应，共节省1500万美元开支。云顶香港去年进行了大比例(57%)裁员，截至2021年底，保留有约7000名雇员(2019年同期约有16200名雇员)，其中约2300名(或33%)为船上职员及船员，以及约4700名(或67%)雇用于全球各地办事处及造船厂的雇员。
同时，2021年12月，为增强流动资金，云顶香港贱卖了于2017年制造的波音787-8飞机，回笼2500万美元。该公司称，于2021年9月30日，飞机的未经审核资产净值约为6190万美元。出售事项亦可节省维修飞机的相关成本，出售所得款项拟用作本集团的一般营运资金。
显见的是，云顶香港已捉襟见肘。云顶香港将偿还33.841亿美元债务的希望寄托于从外部获得资金重组。
2021年5月7日，云顶香港相关财务债权人、合作伙伴及其他利益持份者达成一个内容有关有偿付能力的财务债项修订和重列及资金重整交易(“该交易”)的关键条款的条款清单。其中之一的关键条款是获得德国联邦经济稳定基金的贷款。
In June 2021, Genting Hong Kong issued a press release "German MV Shipbuilding Group received a loan commitment from the German Federal Economic Stabilization Fund (ESF)", stating that the German MV Shipbuilding Group, representatives of the German federal and state governments and its partners, There has been close communication on the possibility of obtaining transitional assistance from the German Federal Economic Stabilization Fund of the federal government and negotiations on general conditions.
After several months of discussions, the German Federal Economic Stabilization Fund took a positive decision on June 3, 2021.
The restructuring measures will be implemented on the basis of the negotiated collective agreement for the transfer, subject to the final decision of the German Hermes Export Credit Guarantee for the post-delivery financing of the Crystal Endeavour and the release of funds from the German Federal Economic Stabilization Fund.
Carsten J. Haake, managing director and financial director of the German MV Shipbuilding Group, said, "The group management and our partners are trying to secure funding for the group's upcoming shipbuilding projects to ensure continued employment for employees."
On June 28 of that year, Genting Hong Kong announced that Wirtschaftsstabilisierungsfonds (WSF, the German Economic Stabilization Fund) provided MVWH and/or certain of its subsidiaries with new subordinated secured loan financing of EUR 240 million and private participation capital of EUR 60 million ( A form of borrowing by providing lenders with equity with limited recourse in exchange for capital injections) (collectively, the “New EUR 300 million WSF Financing”), in order to finance the partially completed construction and construction of the Crystal Endeavor and Global Dream ships. Funds certain overheads.
The new EUR 300 million WSF financing will be guaranteed by certain wholly-owned subsidiaries of Genting Hong Kong and MVWH and secured by a portfolio of composite securities and guarantees.
In addition, on January 2 this year, Genting Hong Kong also disclosed that the company intends to withdraw US$88 million in back-up financing provided by the German state of Mecklenburg-Vorpommern (the "Pre-May State Back-up Financing") to resolve the potential liquidity of the group. legal action required.
Regrettably, on 5 January 2022, Genting Hong Kong was informed that WSF would not be paying the €30 million under the “undisclosed participation” portion of the new €300 million WSF financing.
The knock-on effect was that on January 6, 2022, the Global1 correspondent bank informed that the required milestone payments would not be paid, so the participating banks and correspondent banks were unable to execute the group's drawdown request to issue milestone payments on January 14, 2022.
In addition to the aforementioned liquidity pool that the Group is contractually entitled to use, the Company has also applied to the participating banks pursuant to the Global1 Financing Agreement to release the Company's own US$81 million currently locked in the Liquidity Reserve Account (“Lock Box”) under the Global1 Financing Agreement funds.
To date, the participating banks have not approved such payments.
Genting Hong Kong stated that although the company has fulfilled all the drawdown conditions under the Mei Qian State Standby Financing, Milestone Payments and WSF Standby Financing, the relevant counterparties under these financings failed to honour their respective contractual obligations to pay approximately US$336 million to the Group (i.e. payments under Pre-May State Standby Financing, Milestone Payments, WSF Non-disclosure and Lockbox Release) resulting in immediate and significant shortfalls in liquidity resources.
Will it enter the Macau gaming industry?
In fact, Genting Group was known for its gaming industry in its early years.
According to the data of the British Global Gaming Consultants, in 2005, the top four of the world's top five gaming companies in terms of market value were all in Asia, with Las Vegas Sands taking the top spot with US$25.5 billion, followed by Genting Group (191. ($16.7 billion), Sands China ($16.7 billion), Wynn Macau ($12.4 billion) and SJM Holdings ($9.0 billion).
The current chairman and chief executive of Genting Hong Kong, Tan Sri Lim Kok Thay, is the second son of Malaysian billionaire Lim Gotong, aged 70. He is also the chairman of Genting Group.
According to public information, Lin Wutong was born in Anxi County, Fujian Province, China.
In 1937, 19-year-old Lin Wutong went to work in Malaysia and founded Genting Group in 1964. He died of illness on October 23, 2007 at the age of 90.
In addition to owning casinos in Malaysia, Genting Group has extended its casino business to other countries and regions, including Singapore, the United Kingdom, Australia, and the United States.
According to the annual report, Genting Hong Kong owns a 75% equity interest in a Treasure Island Entertainment Plaza Co., Ltd. in Macau, and thus owns a piece of reclaimed land located in the "Foreland of Yamala" in Macau (called Lot A).
The land is used for hotel and entertainment (subject to the approval of the Macau government).
On January 14, the government of Macau SAR of China announced that the Executive Council has completed the discussion and revision of the draft law of Law No. 16/2001 "Legal System for Casino Lucky Gaming Operation" (hereinafter referred to as the "Gaming Law"). Legislative Council deliberation.
According to the revised Gaming Law, the maximum number of grants to operate casino games of fortune is six, that is, a maximum of six gaming licenses in Macau.
At the same time, licences are granted for a period of no more than 10 years, which can be extended for up to 3 years in exceptional cases.
Before the amendment, the maximum number of grants for casino games of fortune in Macau was 3.
Currently, Sands China, MGM Resorts and Melco International operate under the full franchises of Galaxy Entertainment, SJM Holdings and Wynn Macau, respectively.
To put it simply, the licenses of Galaxy Entertainment, SJM Holdings and Wynn Macau are the "real licenses", while the licenses of Sands China, MGM and Melco International are the "secondary licenses".
Twenty years ago, Genting Group entered the final round of winning the Macau gaming license.
Whether Genting Hong Kong will make another foray into Macau's gaming industry is unknown, but the company has deep ties to Macau's gaming industry.
At the beginning of Genting's listing in Hong Kong, Macau gambling king Stanley Ho bought a 10% stake in Star Cruises, the predecessor of Genting Hong Kong, a Hong Kong-listed subsidiary of Genting Group, which is headed by Lin Wutong, for nearly US$300 million.
Star Cruises and Stanley Ho have reached an agreement to invest in a hotel in Macau through its subsidiary New Orisol, and Ho Hongshen will operate a casino in the hotel. At the same time, Genting Group will invest 3.4 billion in a Sentosa, Singapore. A small stake in the US dollar integrated resort was sold to Stanley Ho.
You know, in Singapore, there are only two casinos, Genting and Sands.
At that time, the Macau gambling industry will take a step towards breaking the long-term monopoly operation situation. The Macau SAR government will issue 3 gaming operation licenses, and the new gambling license will allow foreign companies to bid for the first time.
This means that Stanley Ho will face competition from the outside world, especially from European and American gambling tycoons.
In the eyes of the outside world, the Macau gambling industry, which has been monopolized by Stanley Ho for more than 40 years, is finally coming to an end.
Stanley Ho took a stake in Star Cruises and cooperated with the other party to build a new casino. It can be seen that Hongshen Ho is not willing to sit still in the face of competition from competitors such as Sands, Wynn and Galaxy Entertainment, and began to improve the competitiveness of Macau gaming companies and protect Macau gaming. market share.