A cruise ship operator controlled by Malaysian tycoon Lim Kok Thay plunged as much as 33% in Hong Kong after the company suspended all payments to creditors.
Genting Hong Kong Ltd. said it will use its available funds to maintain critical services for the company’s operations and asked creditors to form a steering committee to evaluate a planned restructuring proposal, according to a statement to the Hong Kong stock exchange on Wednesday night. The company owed a total of $3.4 billion as of July 31, it said.
The firm, part of the Genting group, blamed the cash crunch on the coronavirus pandemic and said the payment halt will likely result in default. Malaysia’s casino-to-hospitality conglomerate Genting Bhd. and its units previously imposed its first group-wide salary cut since its founding in 1965. Lim owned 69% of the Hong Kong unit’s shares as of April 3, according to data compiled by Bloomberg.
“For Genting, the financial stress may push the owner to sell the asset, or liquidate the entire firm,” said Banny Lam, the head of research at CEB International Investment Corp.
“Liquidation is not very likely, but there is such a possibility if Lim doesn’t have money and can’t find a buyer for its assets. In that case, equity holders rank behind bond holders to get compensated.”
Genting Hong Kong shares were down a record 33% at 10:37 a.m. local time. Genting Bhd. shares were untraded due to a holiday in Malaysia. Genting Singapore Ltd. fell 1.4%.–The Star