Genting Hong Kong cruise ship sale-leaseback contract ends

Casino cruise ship operator and investor in Asian land casinos Genting Hong Kong Inc. says its contract to sell and lease ships under construction for its Crystal Cruise business has now ended. The liner, which will be named Crystal Endeavour, is currently being built at one of Genting Hong Kong's shipyards in Germany.

Genting Hong Kong said in a December filing that the parties had agreed to close the deal "due to significant delays in the construction and delivery of ships due to the impact of COVID-19 and uncertainty related to the freezing of cruise operations worldwide and new constraints for resuming operations."

The shipbuilding was originally expected to be completed in early 2020, while ship deliveries were expected to be completed in May 2020, according to previous filings.

At the end of 2019, Genting Hong Kong said its subsidiary Crystal Endeavour SAS had agreed to sell the vessel for a total of 350 million euros ($388.2 million). The deal also includes a "subordinate loan agreement" with the buyer, under which Crystal Endeavour SAS can finance the acquisition by offering buyers loans of up to 300 million euros at an annual interest rate of 7.0%.

The buyer was identified as SNC Envide Leasing, which was incorporated into France at the time and was fully invested by Cafi Hester and Doumer Finance. The latter two companies are indirect divisions of the banking agency Credit Agricole Group.

According to the parent company's latest submission, this contract and subordinated loan agreement have ended "with retroactive effect from January 1, 2020."

It added: "The Parties have agreed to offset the first installment due to be reimbursed to the buyer under the acquisition agreement with the subordinated borrowings due to be repaid to the seller under the subordinated borrowings agreement."

Genting Hong Kong also said the parties acknowledged that withdrawals under the loan agreement "should be considered non-occurring" and Crystal Endeavour SAS "would waive its right to pay any interest under subordinated loans."

Genting Hong Kong reported in August a net loss of about $742.6 million in the first half of 2020, of which about $687.1 million was attributed to the group's shareholders. The casino cruise ship operator held a meeting for the group's creditors on Aug. 24 after it announced it was "temporarily suspending all payments to the group's financial creditors" as 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% stake in its subsidiary related to the development of hotel projects in Macau for a total of HK$750 million ($96.7 million).

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