Global cruise ship operator Genting Hong Kong says it has reached an agreement with its creditors to undergo a holistic recapitalization that will see the company granted extensions to maturities around its US$2.6 billion of debt.
The agreement relates to the groups announcement in August 2020 that it was suspending all payments to financial creditors in order to preserve liquidity due to the impact of the COVID-19 pandemic on its businesses.
Genting Hong Kong operates three cruise lines Dream Cruises, Crystal Cruises and Star Cruises as well as a shipbuilding operation at MV Werften shipyards in Germany. It is also a joint venture partner in Philippines IR Resorts World Manila.
The company, which has since reported a US$1.72 billion loss for FY2020, said upon making its August announcement that it needed to use all remaining available cash to maintain critical services for the groups operations, and will endeavor to negotiate a holistic debt restructuring solution for the current financial indebtedness of the Group.
That solution has now been reached.
According to a Friday announcement, Genting Hong Kongs relevant financial creditors, partners and other stakeholders have provided a formal written agreement and term sheets which outline the key terms of a holistic, solvent, amendment and restatement of the groups financial indebtedness and recapitalization transaction.
Among the lengthy list of terms, the German Economic Stabilization Fund (WSF) will provide to MV Werften a 215 million loan plus an 85 million silent participation the latter essentially giving it a small stake in the company to help fund completion of two new cruise ships currently under construction, Crystal Endeavor and Global Dream.
Group financial indebtedness of US$981 million has seen maturity extended and interest margins reduced, while amortization payments under US$1.5 billion of financing agreements entered into by Dream Cruises, Crystal Cruises and Star Cruises have been suspended for at least two years.
Financial covenant testing under the groups existing financial arrangements have also been suspended.
Pursuant to the terms of the Transaction, Genting Hong Kong must look to raise at least US$154 million of additional liquidity by 31 December 2021. If unable, the company must instead pursue an equity financing of the company for at least US$30 million as well as enter into committed standby loan facilities provided by the State of Mecklenburg Vorpommern and the WSF in the amount of US$124 million.
Genting Hong Kong said the transaction builds upon the improved equity of the group following a recent three-way deal involving Dream Cruises that saw US$59 million in cash raised and US$248 million in intercompany loans set-off.
The Company and its advisers are working diligently towards the implementation and consummation of the Transaction as soon as practicable and will continue to keep the companys shareholders, creditors, other stakeholders and potential investors updated by way of further announcement(s) as and when appropriate, it said.