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Court weighing Genting HK claim to German subsidy backstop

Article-Court weighing Genting HK claim to German subsidy backstop

A German district court today is weighing whether Mecklenburg-Vorpommern state has to pay a subsidy backstop as Genting Hong Kong warned it may not be able to meet financial obligations without those funds.

On Monday, Genting-owned shipyards MV Werften and Lloyd Werft filed for insolvency.

Trading suspension continues

Trading of Genting HK shares on the Hong Kong Stock Exchange has been suspended since Friday.

Genting HK said that in addition to seeking access to the €78m backstop, it has been trying to access various alternative sources of liquidity under existing contractual commitments including a €108m construction milestone drawdown for Global Dream. The cruise operator said export credit agency Euler Hermes refused to confirm the insurance coverage required under loan facilities for the newbuild, resulting in banks not releasing the milestone payment.

New Global Dream financing proposal also in dispute

Subsequently, Genting HK said additional conditions were imposed by Euler Hermes under a new Global Dream financing proposal. This would require more funding on Genting's part, however the cruise operator maintained it has already fulfilled its contributions required as a pre-condition for the financial aid.

So Genting went to court, a move that did not go down well with German lawmakers who, nevertheless, said discussions would continue. 

Unable to access meaningful new liquidity

Genting HK also said it has continued to engage with senior ministers of the German government, including a last meeting on Friday, and its controlling shareholder (a KT Lim company), which offered to increase its funding to the group from $30m, already drawn, to $42m. However, the group said it's unable to access meaningful new liquidity and has 'exhausted all reasonable efforts to negotiate with the relevant counterparties under its financing arrangements.'

Genting added its board is talking with its bankers, its shareholder partner in Dream Cruises Holding Limited, an indirect non-wholly owned subsidiary of the company, and its professional advisers to evaluate options available to the group.

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