GGRAsia – GEN HK pauses investments as 1H loss tops US$742mln

GEN HK pauses investments as 1H loss tops US$742mln

Aug 31, 2020 Newsdesk Latest News, Rest of Asia, Top of the deck

Genting Hong Kong Ltd reported on Friday a net loss of nearly US$742.6 million for the first half of 2020, with about US$687.1 million attributable to the group’s shareholders. That compares with a net loss of US$56.5 million a year earlier. In the latest reporting period, the group’s operations were hurt “by the effects of Covid-19”, the firm said in a filing to the Hong Kong Stock Exchange.

The group is an operator of casino cruise ships and shipyards, as well as an investor in the Resorts World Manila casino resort in the Philippines.

The company said it had to “cancel many sailings and temporarily suspended almost all of its cruise operations since February 2020, and shipyard operations since March 2020,” as a result of the impact from the coronavirus pandemic.

Revenue for the six months to June 30 fell by 69.0 percent year-on-year, to US$226.2 million. The company reported negative earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$204.1 million, compared with a positive result of nearly US$76.9 million in the prior-year period.

As a result of the negative impact of the pandemic on the group’s operations, Genting Hong Kong said it had suspended construction activities at its shipyards in Germany, including deferring the construction of one cruise ship, and suspending the construction of another vessel. It had also secured a deferral of up to 12-months for some principal repayments, it said.

The casino cruise ship operator held on August 24 a meeting for creditors of the group, after it had announced that it would “temporarily suspend all payments to the group’s financial creditors,” including interest and charter payments, while it sought additional funding amid the suspension of its cruise ship business due to Covid-19. It was also amid reports the firm’s chairman Lim Kok Thay had pledged nearly his entire stake in the firm as collateral for loans.

Genting Hong Kong said in Friday’s filing: “The financial creditors have been supportive and a number of the group’s long-term financial creditors have agreed to join an ad-hoc group to extend their support to the group.”

Investors’ interest

As of June 30, Genting Hong Kong’s cash and cash equivalents amounted to US$397.5 million, and the group had total loans and borrowing of just above US$3.26 billion, with US$200.4 million of that amount scheduled to be repaid within 12 months from June 30, 2020, according to its interim report.

At the end of June, the group also had capital commitments of approximately US$1.3 billion, with the majority related to the construction of cruise ships. In view of the suspended construction activities, the majority of such commitments will be delayed,” said Genting Hong Kong.

The firm stated there was a “reasonable prospect that the group will have sufficient working capital and cash flows to meet its financial obligations as and when they fall due within the next 12 months from 30 June 2020.” It added that it had already “received indicative letters” from potential investors, “expressing interest to invest in one of the group’s cruise brands.”

Genting Hong Kong’s cruise operations “are currently suspended” due to the Covid-19 outbreak. On July 26, outside the first-half reporting period, the group said its Dream Cruises brand was ready to restart its cruise services for the Taiwan market. The group said additionally that it had been “informed by the Hainan Commercial Bureau” in mainland China that its brand Dream Cruises was “welcomed to commence domestic cruise operation from Sanya”.

The group is also in the process of negotiation with other regional governments to start domestic cruises,” said Genting Hong Kong, adding that it expected group-wide cruise operations to be “resumed from January 2021”.

The firm additionally said it was applying for long-term funding from the German government’s Economic Stabilisation Fund. Genting Hong Kong expected shipyard operations to “resume in October 2020.”

In a separate filing, Genting Hong Kong said Lim Keong Hui, son of the group’s founder Lim Kok Thay, had resigned as an executive director and deputy chief executive of the company with effect from August 28, “in order to devote more time to other business commitments.” The group’s president Colin Au Fook Yew has been appointed for the positions, it added.