At Dec. 31, Genting HK's liabilities exceeded assets by $3.26bn.
Subject to final approval by certain creditors and stakeholders, the restructuring is expected to be implemented as soon as possible within the coming months.
This builds on the group's recent liquidity boost following new share subscriptions in Dream Cruises by investment group Darting and Ocean World, a Genting HK subsidiary. This raised $59m of new cash from Darting, while Ocean World set off nearly $248m in intercompany loans.
The recapitalization involves a new €215m subordinated secured loan facility and an €85m silent participation, which takes effect via provision of a limited-recourse equity stake to the lender in exchange for contributing funding.
There is €300m in new funding from Germany's Economic Stabilization Fund (WSF) for MV Werften and/or certain subsidiaries to complete the building of Crystal Endeavor and Global Dream. This will be guaranteed by Genting HK and certain wholly owned subsidiaries of MV Werften and secured by a composite security and guarantee package.
The recapitalization also amends terms for $981.05m of debt to include a material extension of the facilities' maturity and the reduction and harmonization of interest margins for up to 24 months.
Amortization payment requirements for nearly $1.5bn of separate secured financing arrangements entered into by Dream Cruises, Crystal Cruises and Star Cruises are suspended until the earlier of June 29, 2023, or the date falling 24 months after the recapitalization's implementation date.
All guarantees and security under the company's existing financing arrangements will be retained, along with the implementation of limited credit enhancement arrangements including granting of new security and assignment of rights.
There is continued provision for drawdowns under existing pre-delivery financing arrangements available to Genting HK to complete Global Dream. And a new committed €280m post-delivery financing facility for Crystal Endeavor on substantially standard market terms will be provided by certain existing lenders. This facility will be guaranteed by the company.
The reorganization further includes suspension of financial covenant testing under all of the group’s existing financing arrangements which contain financial covenants until the earlier of June 29, 2023, or the date falling 24 months after the recapitalization's implementation date, other than in respect of a minimum liquidity covenant which will be reset to an appropriate level.
There will be a full reset of financial covenants until the earlier of June 29, 2023, or the date falling 24 months after the recapitalization's implementation date for the purposes of facilitating a fully funded business plan aligned with anticipated market recovery.
In addition, Genting HK and/or its subsidiaries shall seek to raise at least $154m of additional liquidity by Dec. 31 this year. Should this be unsuccessful, the company will pursue additional liquidity-raising transactions, including equity financing for at least $30m and entry into conditional, committed standby loan facilities of $124m provided by Mecklenburg Vorpommern state and the WSF.
Hit hard by the pandemic, last August Genting HK asked creditors to form a steering committee for a restructuring.
Last month the company reported an unaudited 2020 net loss of US$1.7bn.