Genting Hong Kong said it may temporarily suspend all interest and charter payments as it battles to survive the industry collapse caused by the coronavirus.
The company made the announcement after talks over a potential fund-raising exercise failed to reach any positive conclusion.
The Asian cruise firm said the suspension of financial payments to creditors was taken after “careful consultation with its legal and financial advisers”.
Genting said the move was designed to “preserve as much liquidity of the group as possible” and to treat all its financial creditors “fairly and equitably”.
“The company’s remaining available cash will be reserved to maintain critical services for the group’s operations, while the company will endeavor to negotiate a holistic debt restructuring solution for the current financial indebtedness of the group,” the shipowner said.
Genting said it would “continue to engage with interested parties” identified by its funding advisors, after earlier discussions were said to have required “more time to assess the provision of additional funding” to the group.
Newbuilding payments missed
On Monday two Genting subsidiaries were due to pay EUR 3.7m ($4.4m) in fees in connection with the financing of ships under construction in Germany.
The company said such a non-payment by the two subsidiaries, for which Genting guarantees the obligations to pay the bank fees, constitutes an event of default.
“In addition to the events of default that have already occurred…the board anticipates that the temporary suspension of all payments to the group’s financial creditors will also likely result in events of default occurring under other finance documents of the group,” Genting said.
Such events of default would give rise to a right for requisite of Genting’s creditors to declare that the financial indebtedness owed to them are “immediately due and payable”.
The outstanding financial indebtedness of the group stood at $3.37bn as of the end of July 2020, the company confirmed.
Genting said it intends to invite all of the group’s financial creditors to a virtual meeting to be held as "soon as practicable".
At the meeting it said it intends to provide further information on the current status of its operations and finances, along with restructuring and/or refinancing options in respect of its financial indebtedness.
Genting said it will ask its financial creditors to form a steering committee representing a cross-section of all their interests in order to evaluate its restructuring proposal and to agree on a "holistic restructuring solution".
The shipowner also hopes to convince creditors to "refrain from taking any enforcement action" so that there cane be a "stable platform to negotiate and implement the restructuring".
Genting said it has appointed PJT Partners as its financial adviser and Kirkland & Ellis as its legal adviser to implement any restructuring.
