Genting Hong Kong’s shipbuilding subsidiary MV Werften set to be declared insolvent

   January 10, 2022 ,   Accidents

The GHK-Genting Hong Kong-owned shipbuilding company MV Werften Holdings (MVWH) is reportedly on the brink of bankruptcy after German authorities stalled on the promise to provide financial assistance.

MV Werften management has informed workers at the company’s three German shipyards (in RostockStralsund, and Wismar) on Friday, January 7, that their monthly payments had been delayed due to "complications around loan covenants", part of a recapitalization GHK has undertaken since defaulting on loan payments back in 2020.

According to a company spokesman, although it currently had ~EUR 30 million (USD 34M/GBP 25M) in liquidity to make the payments, there were legal frameworks under which it had not been able to pay the wages.

MVWH is set to be declared insolvent and its shipyards shut down permanently with prospective buyers of the sites making their interest known.

While there hasn't yet been any news from GHK on the matter, the company has halted trading in its shares on the Hong Kong Stock Exchange on Friday “pending the release of an announcement in relation to an inside information of the Company.”

GHK, which in August 2021 suspended payments to financial creditors to preserve liquidity due to the impact of the COVID crisis on its businesses, announced in June that it had finalized a series of agreements with the creditors for the granting new loans & extensions to maturities related to US$2.6 billion of debt.

Among the agreements was a EUR 300 million (USD 340M) grant from Germany’s Economic Stabilization Fund to help fund the completion of Global Dream, at MV Werften shipyards Wismar and Rostock.

However, when GHK attempted to draw down USD 88M of the grant in mid-December 2021 it was informed by authorities it had not met the conditions required to access the loan. A court hearing on the matter is due to take place on Tuesday, January 11.

GHK reported a USD 283,3 million loss for 2021-H1 (the 6 months to June 30, 2021), coming off a USD 1,72 billion loss in FY2020 (fiscal year).