Genting Hong Kong has agreed term sheets to the tune of around $2.6 bill in re-capitalisation.
The board announced that on 7th May, 2021, the company’s relevant financial creditors, partners and other stakeholders provided their formal written agreement to the term sheets, which outline the key terms of a holistic, solvent, amendment and restatement of the Group’s financial debt and re-capitalisation transaction.
This transaction is expected to be implemented as soon as practicable, Genting said, in the coming months following execution of long form documentation and satisfaction of certain commercial and legal conditions.
It builds on the improved liquidity available to the Group following the successful subscriptions by each of Ocean World Limited (a direct wholly-owned subsidiary of Genting) and Darting Investment Holdings for new shares in Dream Cruises Holding Limited (an indirect non-wholly owned subsidiary of the company), by which $59 mill of new cash was raised and $247,927,911.75 of intercompany loans were invoked.
The transaction provides further capital and stability to the Group in order to create a stable runway to execute a fully funded business plan aligned with anticipated market recovery as COVID-19 restrictions ease.
The key terms include:
(i) A new €215 mill subordinated secured loan facility and a €85 mill silent participation (being a form of lending, which takes effect via provision of a limited-recourse equity stake to the lender in exchange for contribution of funding), together the new $300 mill WSF funding.
This will be provided by the Wirtschaftsstabilisierungsfonds (WSF), being the German Economic Stabilisation Fund, to MV Werften Holdings Limited (MVWH) (another indirect wholly-owned subsidiary of the company) and/or certain of its subsidiaries in order to fund the completion of the partially built ‘Crystal Endeavor’ and ‘Global Dream’ vessels and certain overhead costs.
The WSF funding will be guaranteed by Genting and certain wholly-owned subsidiaries of MVWH and secured by a composite security and guarantee package;
(ii) Amendments to $981,050,000 of the company’s existing financial debt (which represents all material existing financial debt) to reflect the following: (a) a material extension of maturity of the facilities; and (b) a reduction in, and the harmonisation of, interest margins for up to 24 months;
(iii) Suspension of amortisation payment requirements under $1,496,897,825 of separate secured financing arrangements entered into by Dream Cruises, Crystal Cruises and Star Cruises entities until the earlier of (a) 29th June, 2023 and (b) the date falling 24 months after the date of implementation of the transaction along with consequential adjustments to each affected amortisation schedule;
(iv) Retention of all guarantees and security under the Group’s existing financing arrangements, along with the implementation of appropriate limited credit enhancement arrangements including granting of new security and assignment of rights;
(v) Continued provision for drawdowns under existing pre-delivery financing arrangements available to the Group in order to fund completion of construction of the partially-completed ‘Global Dream;
(vi) Provision of a new committed €280 mill post-delivery financing facility on substantially standard market terms in respect of the ‘Crystal Endeavor’ by certain existing lenders. This facility will be guaranteed by the company;
(vii) Suspension of financial covenant testing under all of the Group’s existing financing arrangements, which contain financial covenants until the earlier of (a) 29th June, 2023 and (b) the date falling 24 months after the implementation date, other than in respect of a minimum liquidity covenant, which will be reset to an appropriate level;
(viii) A full reset of all existing financial covenants with effect from 29th June, 2023 to reflect appropriate ratios for the purposes of facilitating a fully funded business plan aligned with anticipated market recovery.
In addition, under the terms of the transaction, Genting and/or its subsidiaries will seek to raise at least $154 mill of additional liquidity by 31st December, 2021.
Should the Company and/or its subsidiaries be unsuccessful in raising this additional liquidity, the company will pursue additional liquidity-raising transaction.
PJT Partners and Linklaters are acting as advisers.