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Cruise Ship Construction

A general view of the cruise liner Global Dream, which is still under construction at the shipbuilding hall of the MV Werften shipyards which are insolvent, in Wismar, Germany January 13, 2022. REUTERS/Annegret Hilse

Bankrupt Cruise Line’s Unfinished Ship Attracts Investor Interest

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February 15, 2022

By Arne Delfs (Bloomberg) Billionaire Lim Kok Thay is among several investors interested in purchasing the Global Dream mega luxury liner that was under construction at Genting Hong Kong Ltd.’s now-insolvent shipbuilder, MV Werften in Germany.

Several serious interested parties are in talks to buy the unfinished ship, said Christoph Morgen, the German court-appointed provisional insolvency administrator for the shipbuilder. Morgen is optimistic a deal could come together, but thinks it won’t likely happen before next month because the case is complex, he said at a briefing at the shuttered shipyard in Wismar on Monday.

MV Werften’s provisional insolvency in early January proved to be a turning point for Genting Hong Kong, which became the world’s biggest cruise operator to seek court assistance to safeguard its assets during the pandemic when it filed a windup petition days later. Genting reported a record loss of $1.7 billion in May as the pandemic ravaged the cruising industry.

Lim, who has resigned as Genting Hong Kong’s chairman and chief executive officer, contacted Morgen to express interest in purchasing the ship at the beginning of the provisional insolvency process, Morgen said. The insolvency administrator said he hopes to find “a better solution for the ship” than Lim. 

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“My impression is that he would only like to buy it if nobody else would be interested in order to get it cheap and possibly to finish the ship somewhere else,” said Morgen, who added he hasn’t heard from Lim since. “I hope that we won’t depend on this, because we now have strong interest from many other possible investors.”

The 342-meter liner, which Genting dubbed the Global Dream and which is set to be the world’s biggest vessel by passenger capacity, was heralded as ushering in a new era of mega-ships tapping into Asia’s growing cruising market. The ship was about 72% complete when the German government and Genting couldn’t agree in December on plans to finance $620 million to help finish it and keep the shipyard in business, according to a letter Lim wrote to creditors.

A spokeswoman for Genting, which Lim heads as CEO, declined to comment. Representatives for Genting Hong Kong didn’t immediately respond to a request for comment. Lim still holds about 75% of shares in Genting Hong Kong and heads other Genting businesses, although there are no cross-shareholdings.

Both Lim and German government officials blamed the other for MV Werften’s bankruptcy. German Economy Minister Robert Habeck said his government did everything in its power to save MV Werften, saying the state had offered a loan of 600 million euros ($670 million) on the condition that Genting provides an additional 60 million euros plus guarantees for the federal funds. Genting turned that down, Habeck said.

In his letter to creditors explaining Genting’s slide into provisional insolvency, Lim accused the current German government of not honoring the previous government’s agreement to provide the capital that didn’t require a personal guarantee.

Henning Groskreutz, a union leader from the local IG Metall chapter, said that the shipyard will still need between 500 million euros and 600 million euros to finish the ship. “We will need this money in order to be able to convince the workers to stay here,” Groskreutz said. Many workers have already left and have started at other employers because there’s high demand for such skills.

Habeck said the government would be willing to subsidize the final construction of the Global Dream with a “new reliable investor.”

“If there’s a reliable finance plan, we could make the same offer like over Christmas,” Habeck said, adding that Genting didn’t want to contribute financially to complete the ship. “We don’t want to throw money out of the window.”

Genting’s Crystal Cruises brand shut its U.S. office and terminated employees last week. The closing of Crystal Cruises’ operation in Miami came after two of its ships were seized in the Bahamas after a fuel supplier sought the action for $4.6 million in unpaid fuel bills.

Dream Cruises Holding Ltd., an indirect non-wholly owned unit of Genting Hong Kong that has also filed a winding-up petition, will continue to operate its fleet in the region, the company said.

By Arne Delfs and K. Oanh Ha, with assistance from Yantoultra Ngui. © 2022 Bloomberg L.P.

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