Genting Hong Kong Implodes!

Genting Hong Kong (“GHK”) chairman and chief executive officer Lim Kok Thay resigned, days after the company filed to wind up its business as cruise operator. All this because of Covid-19. Mr Lim, who owns 76 per cent of Genting Hong Kong, stepped down with effect from Jan 21, 2022.

More than two years into the pandemic, GHK is headed for liquidation.  The company’s shares are halted in Hong Kong. GHK is a stark example of how the virus has brought once-thriving businesses to their knees. 

Source: https://www.cruiseindustrynews.com

The company founded in 1993 was to diversify its risk away from the Genting group’s flagship casino resort in Malaysia. Genting, Genting Singapore and Genting Malaysia - have no cross shareholdings with GHK except for Mr Lim being a common stakeholder in all four.

While GHK offered “seacations” as part of a broader trend of cruises to nowhere, it still reported a record US$1.7 billion (S$2.29 billion) loss in May and its stock plunged more than 50 per cent since early of 2020. The company said in its winding-up petition that its cash was expected to run out around end January and it had no access to further funding. Earlier this month, its wholly owned shipbuilding subsidiary, MV Werften, filed for insolvency in a local court in Germany. 

Three Malaysian banks’ profits are set to take a major hit because of the above development. A report by Singapore’s Straits Times said that Malayan Banking (Maybank), CIMB and RHB are among some the unsecured creditors of Genting Hong Kong, with a combined exposure of US$600 million (RM2.5 billion).

It is probable that these banks may have provided fully for their exposures. Nevertheless, details will not be forthcoming under client confidentiality. The only way round this is for the Malaysian Parliament to set up a Banking and Finance Committee, as in the U.S. to understand exposures and implications to shareholders and the economy.

References:

Genting Hong Kong CEO Lim Kok Thay resigns after cruise operator files to wind-up, Straits Times, 24 Jan 2022 (https://www.straitstimes.com) 

Problems at cruise operator Genting Hong Kong could cause major financial trouble for three Malaysian banks, Ashman Adam, 23 Jan 2022 (https://malaysia.news.yahoo.com)