Genting Hong Kong Limited offloading significant stake in Macau subsidiary

The Genting Hong Kong Limited cruise ship subsidiary of Asian casino giant Genting Malaysia Berhad has reportedly announced that it is selling half of its interest in a subordinate that is currently developing a new waterfront hotel in Macau.

According to a report from Inside Asian Gaming, the Hong Kong-listed firm via its wholly-owned Genting Macau enterprise is building a 21-story hotel on a two-acre parcel of reclaimed land in the Nam Van district of Macau. The source detailed that this project is set to open in 2022 while its owner had earlier suggested that it may look to bring a gambling component to the property as part of the former Portuguese enclave’s upcoming casino license tendering process.

Disposal decision:

However, Genting Hong Kong Limited reportedly used an official filing to explain that it has now inked a deal that is to see real estate investor Ao Mio Leong pay approximately $96.1 million for a 50% stake in Genting Macau. The firm purportedly declared that the agreement with the man behind local property development firm Yoho Group forms part of its ‘objective to sell non-core assets’ so as to lower its overall financial burden and allow the subsidiary to meet its ‘future funding requirements.’

Reportedly read the filing from Genting Hong Kong Limited…

“Further, the transaction will increase the liquidity of the group with the proceeds being used for general working capital for the group, thereby enabling layup of the cruise ships in its fleet that are not in operation as well as the ongoing operation of those cruise ships that continue to sail, in addition to funding the group’s cruise-related and other operations.”

Instant improvement:

Genting Hong Kong Limited reportedly pronounced that the arrangement is due to see Leong pay around $6.4 million in cash and agree to take over responsibility for a loan secured against its subsidiary valued at roughly $89.7 million. The firm furthermore purportedly asserted that it expects the transaction will result in a long-term loss of about $159 million although generating immediate liquidity in the region of $95.9 million.

Troubling trend:

Currently responsible for a trio of cruise ships under its Dream Cruises brand encompassing the Genting Dream, World Dream and Explorer Dream vessels, Genting Hong Kong Limited reportedly suspended creditor payments in August as part of an effort to restructure its debts and preserve liquidity amid the coronavirus-induced downturn. The firm is purportedly currently in the hole to the tune of some $3.37 billion and has been left reeling after its first-half loss rose by over 1,200% year-on-year to top $742.6 million.