Genting Hong Kong, the Hong Kong-listed cruise ship arm of Malaysian group Genting, says there is a good chance it will end up selling all of its remaining stake in a hotel and casino development in Macau as it struggles to keep its struggling cruise business afloat.
The company announced in November that it had reached an agreement to sell 50% of its stake in Genting Macau, a then 100% -owned subsidiary that is developing a hotel along Macau’s Nam Van Lake, to the major real estate investor. local Ao Mio Leong. The sale, which came three months after the company suspended all payments to its financial creditors in an effort to preserve cash, earned Genting HK $ 750 million ($ 96 million).
In a filing on Thursday, Genting HK said the transaction was finalized on December 2, 2020, but suggested that the sale of its remaining 50% stake remains very likely based on the put and call options that made part of the original sales agreement.
Under the agreement, Ms. Ao has 12 months from the closing of the sale to exercise a call option that would allow her to purchase Genting HK’s remaining 50% stake in Genting Macao, while Genting HK has an additional 12 months from December 2, 2021 to require the sale via a put option.
Notably, the company said on Thursday that it retains no control or influence over Genting Macao and that the 50% divestiture will be treated as a 100% divestiture for accounting purposes, due to the likelihood of the options being exercised. . Genting Macao, he added, ceased to be a subsidiary of the company, with group assets believed to have declined by $ 507.1 million as a result.
Genting HK also confirmed that he was forced to sell his Macau assets in order to keep his main cruise ship business afloat – essentially giving up his dream of bidding for a lucrative Macau casino license for the new onboard development. Lake.
With future development costs expected to reach HK $ 2.72 billion (US $ 350 million), the company said it “would undoubtedly divert the group’s resources at a time when the group must focus on cruise and shipyard operations.
âThe Operation will increase the Group’s liquidity … thus allowing the decommissioning of cruise ships from its fleet that are not in service as well as the continued operation of cruise ships that continue to sail, in addition to financing cruise activities. of the group. and other operations, âhe said.
âIn particular, in November 2020 when the Sale and Purchase Agreement was signed, the Group resumed the flagship deployment of World Dream in Singapore. The funds derived from the transaction provided additional working capital to improve onboard facilities for infection prevention, CruiseSafe certification and vessel reactivation, while also responding to the burn rate of other vessels under layage. “