Genting HK terminates sale-leaseback deal on cruise vessel

Genting HK terminates sale-leaseback deal on cruise vessel

Genting Hong Kong Ltd, an operator of casino cruise ships and investor in Asian land-based casinos, says that a deal to sell and lease back an under-construction vessel intended for its Crystal Cruises business has now been terminated. The liner – to be named Crystal Endeavor – is currently being built in one of Genting Hong Kong’s shipyards in Germany.

In a December filing, Genting Hong Kong said the parties had agreed to terminate the deal because of the “substantial delay in construction and delivery of the vessel due to the impact of Covid-19 as well as the worldwide freeze of cruise operations and the uncertainty in relation to new constraints to allow the operations to resume.”

Construction of the ship was originally expected to be completed in early 2020, with delivery of the vessel expected to be in May 2020, according to previous filings.

In late 2019, Genting Hong Kong said that its subsidiary Crystal Endeavor SAS had agreed to sell the vessel for a total consideration of EUR350 million (US$388.2 million). The deal involved also a “subordinated loan agreement” with the purchaser, under which Crystal Endeavor SAS would grant a loan of up to EUR300 million – with a 7.0-percent interest rate per year – to the purchaser to finance the acquisition.

The purchaser was identified at the time as SNC Endeavor Leasing, a company incorporated in France, and which is wholly-owned by Cafi Hester and Doumer Finance. The latter two companies are indirect units of banking institution Crédit Agricole Group.

According to the parent company’s latest filing, the deal and the subordinated loan agreement “were terminated with retrospective effect from 1 January 2020.”

It added: “The parties agreed that the first instalment to be refunded to the purchaser under the acquisition contract shall be set off against the subordinated loan to be repaid to the seller under the subordinated loan agreement.”

Genting Hong Kong said additionally that the parties acknowledged that the drawdowns under the loan agreement “shall be deemed not to have occurred,” and that Crystal Endeavor SAS would be “waiving its rights of payments of any interest under the subordinated loan.”

Genting Hong Kong reported in August a net loss of nearly US$742.6 million for the first half of 2020, with about US$687.1 million attributable to the group’s shareholders. The casino cruise ship operator held on August 24 a meeting for creditors of the group, after it had announced that it would “temporarily suspend all payments to the group’s financial creditors,” while it sought additional funding amid the suspension of its cruise ship business due to Covid-19.

In November, the company said it had agreed to sell a 50-percent stake in a subsidiary – for a total consideration of HKD750 million (US$96.7 million) – involved in the development of a hotel project in Macau.

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