Genting HK first half loss widens to $742.6m

Genting HK had earlier warned on a loss of at least $600m, announced plans for a restructuring and held its first creditors' meeting earlier this week.

The group has engaged PJT Partners and Linklaters to work with its financial partners to agree and implement a solvent restructuring solution and an ad hoc group of bankers has been formed to work with PJT Partners.

Adequate working capital/cash flow until June 2021

Genting HK believes that by reining in capital expenditure and cutting other costs, it has adequate working capital and cash flow to meet financial obligations until June 2021. The directors said bookings for cruises starting in 2021 are 'gradually improving' as travel restrictions ease and cruise operations are expected to resume in January.

Interest from investors in one of the cruise brands

Genting HK directors are also in the process of seeking additional equity or debt funding from private investors and have received letters from investors expressing interest to invest in one of the cruise brands. The company owns Star Cruises, Dream Cruises and Crystal Cruises.

Non-cash impairment

The 2020 results included adjustments of $386.6m, primarily consisting of expenses related to non-cash impairment losses on certain intangible assets, property, plant and equipment and other assets, share of associates' results and losses on refinancing Genting Dream debt.

Total revenue decreased to $226.2m from $729.2m due to the fleetwide suspension of voyages since March.

The EBITDA loss of $204.1m compared to EBITDA of $76.9m in the first half of 2019. After depreciation and amortization, the operating loss was $323.2m versus $38.3m in early 2019.

MV Werften to resume work in October?

The shipyard EBITDA loss of $36.2m, down from EBITDA of $4.3m a year ago, was primarily due to the suspension of three shipyards’ operations since March. The group has applied for long-term funding from Germany's Economic Stabilization Fund and expressed confidence the conditions for application can be met by September to support approval for funding starting in October.

Defers work on Global II, suspends Endeavor II

As earlier reported, the deliveries of Crystal Endeavor and Global Dream from MV Werften have been delayed by 'about a year.' Construction of the second Global-class ship has been deferred and the second Endeavor-class ship suspended, with the directors in the process of deferring the materials supply contracts for Global II and canceling the materials supply contracts for Endeavor II.

Genting HK has implemented various other cost-cutting initiatives to aggressively reduce non-essential operational expenses, including minimizing all non-essential ship/shore costs, enacting pay freezes/reductions and reducing headcount to conserve cash and minimize the monthly cash burn rate.

All but three ships are being laid up

All ships other than Explorer Dream, SuperStar Aquarius and SuperStar Gemini are being laid up. Explorer Dream has been operating domestic cruises from Taiwan since late July, while SuperStar Aquarius and SuperStar Gemini are in Singapore, providing temporary accommodations for foreign workers who have recovered from COVID-19.

Genting HK said Dream Cruises has been welcomed to operate domestic voyages from China's Hainan Island.

All non-essential capital expenditures except for maintenance to safeguard the ships, passengers and employees have been suspended.

The group’s debt maturity profile improved after securing a deferral of up to 12 months for some principal repayments.

A net loss is expected for full-year 2020.

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