Hong Kong-based Genting Cruise Lines (controlled by the Malaysian-Chinese billionaire Tan Sri Lim Kok Thay) on August 20 suspended all payments to creditors, triggering a 36% drop in the company's shares and denting the investors' confidence in Lim’s business empire.
Genting Hong Kong Ltd announced it will use its available funds in order to maintain critical services for the company's operations and asked creditors "to form a steering committee to evaluate a planned restructuring proposal," a statement to the Hong Kong stock exchange said. As of July 31, the company owed a total of US$3.4 billion.
Genting Hong Kong (GHK) blamed the cash crunch on the Coronavirus (COVID-19) crisis and said the payment halt would likely result in default. As of April 3, Lim owned 69% of the shares of the Hong Kong unit, according to Bloomberg. Malaysia’s conglomerate Genting Bhd. and its units had imposed a first group-wide salary cut since its establishment in 1965.
GHK shares fell a record of 36%. Genting Bhd shares were untraded because of a holiday in Malaysia.
According to Citigroup Inc, there had been “some reputational damage” to the Genting Group as chairman Lim was the common sponsor of GHK and other group companies. However, it doesn't see cross-defaults for the other firms of the group.