Embattled cruise ship operator Genting Hong Kong is set to receive a €193 million (US$227 million) subsidy from Germany’s government to continue operations at its German shipyard MV Werften.
The cash handout, roughly a third of the €570 million Genting HK has requested from the nation’s stabilization fund, forms part of a government initiative to keep German workers in active employment through the COVID-19 pandemic.
But it also comes at an opportune time for the Asian operator, which announced in August it was temporarily suspending all payments to the group’s financial creditors, including interest and charter payments, in order to preserve liquidity amid growing COVID-19 pressures. The company has debts totaling almost US$3.4 billion.
According to Nikkei Asian Review, the decision to grant an Asian company such a substantial handout has been met with mixed reactions in Germany.
“Decisions on state aid are particularly difficult when they involve foreign parent companies, as it is not easy to interfere with foreign parent companies’ cash management to ensure that funds do not flow abroad,” explained opposition party member Otto Fricke.
“But Genting no doubt enjoys enormous leverage given that we acknowledge the necessity of bringing its many highly qualified German workers as well as its massive local tech supply chain through the crisis.”
MV Werten, purchased by Genting HK in 2015 following its acquisition of Dream Cruises, employs around 3,100 workers.
Genting HK operates three global cruise lines in Dream Cruises, Crystal Cruises and Star Cruises and is a joint venture partner in Philippines IR Resorts World Manila.
The company last month reported a consolidated net loss of US$742.6 million for the six months to 30 June 2020.
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