Genting HK has been in lengthy negotiations with creditors and other stakeholders that so far haven't succeeded.
'... Unless the company receives credible proposals for a solvent, consensual and inter-conditional restructuring solution, the board will potentially proceed with a filing of provisional liquidation of the company with the competent court of Bermuda on 18 January 2022,' Genting said in a statement.
'The board believes that the appointment of provisional liquidators is essential and in the interests of the company, its shareholders and its creditors in order to maximise the chance of success of the financial restructuring and to provide a moratorium on claims and to seek to avoid a disorderly liquidation of the company by any of its creditors,' Genting HK continued.
'Following the appointment of the provisional liquidators, the company, together with its professional advisers, will continue to work towards implementation of a consensual and inter-conditional restructuring of the group to preserve value for all creditors and other stakeholders.'
Trading was suspended on the Hong Kong Stock Exchange and three of the company's independent non-executive directors resigned — Alan Howard Smith, Lam Wai Hon and Justin Tan Wah Joo. This put the number of directors below the exchange's minimum requirements. Genting HK said it would seek to fill those roles.
The actions follow Monday's German court ruling against Genting HK's appeal for Mecklenburg-Vorpommern state to pay a backstop loan of €78m. The company had warned it may not be able to meet its financial obligations if it didn't get the loan and last week its German shipyards, MV Werften and Lloyd Werft Bremerhaven, filed for insolvency.
MV Werften insolvency
MV Werften's filing gave rise to an event of default for the Global Dream newbuild facility agreement and this, in turn, triggered cross default events under certain financing arrangements for the group that total approximately $2.7bn. Last week Genting HK said it had not received notice that any of the relevant creditors is demanding repayment or commencing action pursuant to their respective financing arrangements, adding it was unclear whether any would choose to do so.
Previous restructuring completed June 2021
Last month Genting applied for the backstop loan from Mecklenburg Vorpommern, citing continued pandemic recovery challenges. This backstop loan was part of the June 2021 restructuring that was to be applied in case of financial distress. At the time, it was expected a liquidity gap could arise around 2024.
Schwerin District Court did not agree Genting was in a distress situation without the loan.