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Genting Hong Kong in Financial Stress

· Travel News

8/25/20 - Update to original post:

Crystal Cruises has released a statement saying they assure the public that Genting HK's financial woes will not effect Crystal Cruises and quoted saying:

“It is important to understand that the company is not going out of business. Whatever option our parent company pursues, it will allow Crystal to operate its business,” Crystal said in a statement. “Whatever option our parent company pursues, it will allow Crystal to operate its business.”

Original Post:

Good day readers and clientele. Another slow week, even slower than the last two weeks.

So much so I decided it was a good time to reactivate my Instagram account (finally), and as well I joined the Twitterverse. You'll now find the Twitter social icon had been added to all my social links on all pages. Hope to see some of you there! Now to the news, yes.

We all know (or you will now), that most major cruise lines are owned by the likes of a handful of cruise companies like Carnival and RCCL. What many non industry folks don't know is a Hong Kong company Genting HK, (or Genting Hong Kong, Genting Group), own and operate Crystal Cruises (one of the worlds top luxury cruise lines), along with two other smaller Asian lines in Dream Cruises and Spirit Cruises. In addition to a shipyard in Germany and a few resorts.

It was reported just yesterday that Genting HK will temporarily suspend all payments to the group’s financial creditors, including interest and charter payments, in order to preserve liquidity amid growing COVID-19 pressures. This comes on the news that two of the company’s subsidiaries – Dream Global One Limited and Dream Global Two Limited both failed to pay €3.7 million in bank fees this week, constituting an event of default. This can cause all creditors now to have the right to declare the debts owed them immediately and payable. (A financial debt domino effect.)

In an update on recent development, including ongoing disruptions to the global cruise ship industry which constitutes its primary business arm, Genting HK said it will instead use remaining available cash "to maintain critical services for the group’s operations, and will endeavor to negotiate a holistic debt restructuring solution for the current financial indebtedness of the Group.”

As of 31 July 2020, the outstanding financial indebtedness of the Group is at US$3.37 billion.

Many advisors in the industry and clientele booked on Crystal for 2020, found Crystal was the most delayed and unsatisfactory in refunding cancelled cruises for the year. Fortunately for me before COVID broke out I did not have any Crystal cruises on the books yet and didn't have to go through the difficulties others reportedly have had with Crystal.

While I would highly doubt Crystal will have to cease operations and go bankrupt. Some kind of financial restructuring will definitely have to be done within Genting HK quickly. Crystal is Genting HK's cash cow, the pride of their portfolio. A leading luxury international cruise line that sails worldwide. Crystal is taking reservations for 2021-22 sailings. I could see them sacrificing Dream and or Spirit Cruises to keep Crystal afloat. Crystal is obviously the most attractive part of Genting HK's portfolio and any new financiers are likely going to want a piece of it as collateral for any debt. 

We may see some of Crystal's fleet sold off or promised as collateral to secure funding & debt agreements. Nothing is known just yet and Crystal has no comment. That is not surprising as Genting HK informed they will soon hold a virtual meeting with all investors to discuss refinancing and restructuring options.

Personally I do not hold any negative view of Crystal, they are one of our leading luxury cruise lines annually for clientele, and we have a strong working relationship with them. I'm pretty confident feeling that Crystal's beautiful ships will be sailing the world in 2021.

I feel this situation is similar to negotiations that happened financially with Carnival Corp and RCCL who both have had to go through massive financial restructuring to settle and reconfigure indebtedness. So to now will Genting HK have to do the same.

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Derek Schemonitz

Avenue Two Travel

Luxury Travel Advisor