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Chairman Lim Kok Thay pledges entire stake in troubled Genting Hong Kong as collateral for loans

The Chairman and CEO of Malaysian gaming giant Genting Berhad, Lim Kok Thay, has pledged almost his entire stake in troubled cruise ship operator Genting Hong Kong as collateral for loans and relief amidst the COVID-19 pandemic

According to Bloomberg, Lim has now pledged almost all of his 6 million shares in Genting HK, representing a 76% stake, as well as almost a third of his Genting Berhad shares as the company fights for survival.

The revelation comes after Genting HK announced last week it was temporarily suspending all payments to the group’s financial creditors, including interest and charter payments, in order to preserve liquidity amid growing COVID-19 pressures. That decision was made in the wake of two subsidiaries – Dream Global One Limited and Dream Global Two Limited – failing to pay €3.7 million in bank fees, constituting an event of default.

Genting HK – which operates three cruise lines in Dream Cruises, Crystal Cruises and Star Cruises, a shipbuilding operation at MV Werften shipyards and is a joint venture partner in Philippines IR Resorts World Manila – said at the time it plans to invite all creditors to a virtual meeting at which it will provide further information on the status of the group’s finances, along with restructuring and refinancing options.

The company had earlier this month issued a profit warning ahead of expected losses totaling more than US$600 million for the six months to 30 June 2020.

News of Genting HK’s inability to pay its outstanding debts saw its shares plummet by more than 20% on Thursday, from HK$0.370 at open to HK$0.290 by mid-afternoon, with Bloomberg warning it now risked a margin call. The share price has fallen by 62% from HK$0.770 since the start of the year.

“Many companies hit a bump in the road causing a sudden decline in stock price,” Michael Melbinger, a partner of US-based law firm Winston & Strawn, told Bloomberg. “That happens.

“However when this bump causes the most significant shareholder and director of the company to have to sell shares, or a margin call automatically triggers the selling, the problem becomes much, much worse.”

Lim’s personal fortune has almost halved in 2020, down from US$1.5 billion to around US$700 million according to Bloomberg Billionaires Index.

The Malaysian tycoon is Chairman and CEO of Genting Berhad, Genting HK and Genting Malaysia, Executive Chairman of Genting Singapore and a director of Resorts World Manila operator Travellers International Hotel Group.

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