Genting HK in talks with German govt for additional US$600m rescue fund

Genting HK in talks with German govt for additional US$600m rescue fund
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KUALA LUMPUR (Feb 23): Cruise ship operator Genting Hong Kong Ltd (Genting HK) and its associate, MV Werften, are in talks with the German federal and state government for the release of additional rescue funds worth US$600 million (RM2.43 billion) to keep the financially troubled shipyard group afloat.

Maritime and marine news portal The Maritime Executive reported yesterday MV Werften highlighted that the negotiations for a rescue package included maintaining the current cruise ship construction projects at the three eastern shipyards and reducing its workforce.

It added that meanwhile, there is also talk of closing the MV Werften-owned Lloyd Werft shipyard in Bremerhaven, Germany.

MV Werften added it had begun talks with the labor unions and government authorities to begin a transition programme that could see as many as 1,200 of the group's 3,000 lose their jobs.

"The prerequisite for the granting of federal loan is the adjustment of the number of staff to the order situation," MV Werften MD Peter Fetten said.

Previously, the State of Mecklenburg-Vorpommern, where the shipyards are located, and the federal authorities had provided an initial bridge loan from Germany's Federal Economic Stabilization Fund (WSF) valued at US$228 million (RM921.53 million).

The loan was intended to cover ongoing operating costs including wages and salaries of employees at the shipyard sites.

According to the Ministry of Economics in Mecklenburg-Vorpommern, earlier this year the shipyard group also received another US$65 million (RM262.72 million) to save the operation from insolvency.

Commenting on the financial aid, the minister said that their focus was on providing the finances necessary to maintain near-term work and employment through the construction of the two 200,000 gross ton cruise ships currently being built for Genting's Dream Cruises.

Work on the first of the Global Dream cruise ships began in September 2018, followed by her sister ship a year later. MV Verften also suspended work in the spring of 2020 as the global supply line was affected due to the Covid-19 outbreak.

In a separate statement, commenting on long-term downturn in the cruise ship industry, MV Werften said it expects to refocus the yard's work to include tankers and platform vessels.

In 2016, Genting HK bought MV Werften and the latter has been building three ships for Genting, namely the Crystal Endeavor, as well as the Global Dream and the Global 2, due for completion in 2021 and 2022, respectively.

At the Hong Kong bourse today, shares of Genting HK rose 8% to HK$0.54 at the time of writing for a market value of HK$4.58 billion.

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