Genting Hong Kong has revealed its shipbuilding unit in Germany, MVWH, has filed for insolvency after failing to reach an agreement over financial assistance.
Hong Kong.- The cruise line operator Genting Hong Kong has reported MV Werften Holdings Ltd (MVWH), the company’s shipyard located in Germany, has filed for bankruptcy.
Genting Hong Kong stated the company couldn’t reach an agreement with German authorities to get financial assistance to finish the building of a massive cruise liner.
Last year, the casino cruise ship operator was actively looking for new funding sources due to the uncertainty surrounding the appearance of new outbreaks of Covid-19 in the region.
Last June, Genting HK announced it had made a series of deals to gain access to new loan facilities and an extension on existing arrangements.
The agreement granted it access to new loan facilities of US$700m, an amendment and extension of existing financial indebtedness and a provision of backstop funding arrangements to address future liquidity needs.
Last December, Genting HK also said that a company related to its chairman Tan Sri Kok Lim had agreed to provide a bridge loan of $30m as part of a restructuring plan reached with creditors.
The group’s financial woes have also sparked the bankruptcy filing of Lloyd Werft Bremerhaven AG, another shipyard Genting HK owns in Germany.
According to Associated Press, Germany blamed Genting HK for the collapse of the shipyard business.
German authorities said they were open to discussing a €600m (US$678m) rescue plan, but wanted Genting HK to contribute at least 10 per cent to the rescue effort.
In its latest filing, Genting Hong Kong confirmed that the German authorities have sought to replace the existing financing structure with a new financing package, seeking to “impose additional conditions on disbursement of funds”.
Additional conditions included that participating banks with existing loans must be “subordinated to their existing securities” to support the German Economic Stabilisation Fund.
It was also disclosed Genting Hong Kong’s controlling shareholder had to provide an additional €60m in new funding to support MVWH and its subsidiaries.
Genting Hong Kong said in its filing that it couldn’t compel participating banks in existing facilities or their shareholders to provide the additional financial assistance now requested by German authorities.