Genting Hong Kong Ltd, a cruise operator, has filed for liquidation as its cash reserves are expected to run out by the end of January. This places the spotlight on Lim Kok Thay, the company’s largest shareholder. The Hong Kong-based company has been hit hard by the drop in travel demand caused by Covid-19, which has resulted in a slew of restructurings and insolvencies among travel companies throughout the world. In May, it reported a record loss of US$1.7 billion, and the latest revelations come as Hong Kong reintroduces some of the strictest virus restrictions it has implemented since the pandemic began. As there is no cross-shareholding between the Genting companies in Malaysia and Singapore, winding up the corporation is unlikely to have an influence on their profitability. In terms of earnings, the Genting shares listed in Malaysia and Singapore would be unaffected. However, some experts have speculated that Lim may try to save the company with the help of its sibling companies, which might put their stock at risk.
The filing in Bermuda’s Supreme Court, where the company’s registered office is located, is a means of obtaining aid in defending the company’s assets. In a statement to the Hong Kong stock exchange on Wednesday, the company claimed it had “exhausted all reasonable attempts” to negotiate with its creditors and stakeholders. Investors will also be looking for a restart of trading in the company’s Hong Kong-listed shares, which have dropped over 50% this month. Until further notice, the stock will be stopped. The question is whether Lim will use other portions of his Genting business to assist with any bailout or financial assistance and he has a track record of doing so. He had previously conducted related party transactions through Genting Malaysia. Genting Malaysia, for example, said in 2019 that it was purchasing a 46 percent ownership in Empire Resorts in New York from him. The stock of Genting Malaysia has dropped as a result of this agreement. Empire Resorts currently has 49 percent ownership in the Malaysian company. Another source of concern is Lim’s guarantee of practically his entire Genting Hong Kong ownership as collateral for loans to keep the Hong Kong company afloat.
