Lim Kok Thay resigned as chairman, chief executive officer and executive director of Genting Hong Kong effective Jan 21, the company said in a Hong Kong stock exchange filing1. The resignation came days after the company, which is 76 percent owned by Lim, filed a petition in Bermuda to wind up the company and appoint provisional liquidators1.
Genting Hong Kong said its cash was expected to run out around the end of January and that it had no access to further funding1. It said it had "exhausted all reasonable efforts" to negotiate with its creditors and stakeholders1. Its shares had plunged more than 60 percent from a November high before they were suspended on Jan 181.
Lim, now 70, founded the company that would become Genting Hong Kong in 1993, buying ferries from a bankrupt cruise firm to operate under the Star Cruises brand1. It later bought the Crystal Cruises brand in the United States and set up the high-end Dream Cruises in Asia, and from 2015 acquired several shipyards in Germany to build its own vessels1. Earlier in January, its wholly owned shipbuilding subsidiary MV Werften filed for insolvency in a local court in Germany1. The company reported a record US$1.7 billion loss in May1.
"Genting Hong Kong won't be the last cruise operator to run out of money," he said. "Creditors and stakeholders are tired of throwing good money after bad."
Genting Hong Kong's difficulties reflect its focus on Asia, where big markets such as China and Hong Kong remain shut down and are pursuing Covid-Zero strategies, while operators such as Carnival and Royal Caribbean Cruises rebound in markets including the US and Europe1. Analyst Samuel Yin Shao Yan of Maybank Investment Bank in Kuala Lumpur said the expansion plans of the other Genting companies should not be negatively impacted and that debts at each company are ring-fenced1.
| Genting group company | Development cited |
|---|---|
| Genting Malaysia | Bought the Equanimity superyacht for US$126 million in 2019; preparing to open a US$800 million outdoor theme park1 |
| Genting Singapore | Conducting a $4.5 billion expansion of Resorts World Sentosa1 |
| Resorts World Las Vegas | US$4.3 billion resort opened in June1 |
Genting Malaysia sold its 17 percent stake in Genting Hong Kong for US$415 million in 20161. None of the companies has cross shareholdings with Genting Hong Kong, except for Lim owning shares in each of them1.
What it means for players
Genting Hong Kong's casino and resort operations are separate from its cruise business, and the filing concerns the cruise company rather than the group's land-based casinos and integrated resorts in Asia. The company's Malaysian resort, Resorts World Genting, is the only licensed casino resort in a Muslim-majority country that frowns on gambling1; its rules and access are covered in the guide to gambling in Malaysia. Genting Singapore's Resorts World Sentosa, one of the largest casino resorts in Southeast Asia, is undergoing a $4.5 billion expansion1, and entry and play there are set out in the guide to gambling in Singapore. Hong Kong, where Genting Hong Kong was listed, has no casinos of its own, as explained in the guide to gambling in Hong Kong. How the region's main resort markets compare is set out in the guide to Asia's casino destinations.
What happens next
Genting Hong Kong's petition in Bermuda seeks to wind up the company and appoint provisional liquidators1. The company said its cash was expected to run out around the end of January1. Whether Lim may try to bail out Genting Hong Kong with help from other group companies has been raised as an open question1. No outcome of the Bermuda petition has been reported.
