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SINGAPORE – Ailing cruise operator Genting Hong Kong sold the Zouk Group, which operates the popular nightclub, for $ 14 million as part of efforts to shed non-core assets and generate liquidity for the cash-strapped company.
Malaysian firm Tulipa is buying the Singapore-based group, according to a presentation on the Hong Kong Stock Exchange on Tuesday (September 1) evening.
Tulipa is owned by Mr. Lim Keong Hui, son of the controlling shareholder of Genting Hong Kong.
Lim resigned from the Genting Hong Kong board of directors last week.
The cash sale is expected to result in a profit of around HK $ 6.7 million (S $ 1.2 million), to be used as working capital, according to the document.
Concerns arose about Genting’s finances in July after it revealed that it had suspended all payments to creditors.
The firm said at the time that cash flow had been affected by the coronavirus pandemic and that funds would have to be channeled to critical services for the company’s operations.
Genting Hong Kong owns the Star, Dream and Crystal Cruises brands, operates shipyards and has a stake in Resorts World Manila.
Tuesday’s filing says the sale of the Zouk Group is part of an effort to conserve cash and seek additional sources of financing to sustain the business, pending the resumption of cruise operations.
The homegrown Zouk nightclub, ranked among the best clubs in the world, was sold to Genting Hong Kong in 2015. The other assets of the Zouk Group include the Five Guys burger joint in Plaza Singapura.
The group had a pre-tax loss of HK $ 79.6 million during the seven months to July 31 and had an unaudited consolidated NAV of around HK $ 72.6 million as of the same date, it said Tuesday.
While the total consideration for the sale shares is valued at $ 14 million, the final amount is subject to adjustment based on Zouk’s cash level. Upon completion of the transaction, the Zouk Group will cease to be a wholly owned indirect subsidiary of Genting Hong Kong.
Genting Hong Kong reported a net loss of $ 742.6 million (Singapore $ 1.01 billion) last Friday for the first half of the year, largely due to port closures that forced cruise lines across the world. world to suspend travel from February.
Revenues for the six months were $ 226.2 million, down from $ 729.2 million for the same period last year.
The Hong Kong-listed company owes $ 3.4 billion as of July 31.
It is implementing a series of measures that will give it a “reasonable prospect” of meeting its financial obligations until June next year, it said last Friday.
These include cost reduction, capital expenditure reduction, loan deferral, restructuring and seeking additional capital or debt financing from private investors.
He said he has already received interest to invest in one of his cruise brands.
Bloomberg reported last month that Malaysian tycoon Lim Kok Thay, chairman of the Genting group, pledged almost his entire stake in Genting Hong Kong as collateral for loans after the company suspended payments to creditors.
Malaysian conglomerate Genting’s gambling and hospitality empire has been severely affected by pandemic-related restrictions, which have forced the temporary closure of casinos and put a pause in tourism around the world.
Resorts World Sentosa, operated by Genting Singapore, laid off about 2,000 employees in July after the integrated resort closed for nearly three months.
This article was first published in The Straits Times. Permission is required for reproduction.
