A number of potential buyers are lining up for Genting Hong Kong’s Global Dream — the unfinished mega-liner set to be the world’s biggest cruise ship by capacity — and a deal needs to be signed by summer when the company’s closed German shipbuilder will run out of cash, said the liquidator overseeing the sale.
Still, the ship will not be sold in a rush despite it sitting unfinished in a German shipyard that has filed for insolvency, according to Christoph Morgen, the German court-appointed provisional insolvency administrator for MV Werften, the shipbuilding unit owned by Genting.
The vessel’s sale, which began with three potential buyers, has now attracted a “significant number” of interested parties, including investors who are keen on it as part of a larger purchase that includes operator Dream Cruises, Mr Morgen told Bloomberg News.
“We will have a speedy process, but there is no need for a fire sale,” Mr Morgen said from Berlin. “Our target is to get the highest price.”
The Global Dream reportedly cost $1.8 billion to build and lenders had financed about €1.4bn ($1.6bn) for the ship’s construction.
Mr Morgen declined to give a price for how much it will cost to complete the ship but said he wants interested buyers to bid for the whole value of the completed vessel and not simply “completion costs plus a little on top".
Because Global Dream is so heavily financed — credit was provided by a consortium of more than a dozen lenders and four guarantee providers — a sale will not make much difference to Genting Hong Kong.
MV Werften’s provisional insolvency in early January was a critical turning point for the company, which became the world’s biggest cruise operator to seek court assistance to protect its assets during the Covid-19 pandemic when it filed a wind-up petition days later.
Genting reported a record loss of $1.7bn in May as the pandemic ravaged the cruise ship industry.
Mr Morgen said his priorities include finding buyers for the shipyards under MV Werften and the Global Dream vessel.
He is optimistic a deal will be struck before or by summer, when the shipyard in Wismar, Germany that is building the mega Global Dream runs out of money. Once that happens, it will be harder for the shipyard to return to normal operations, he said.
The 342-metre liner, about as long as a football field and designed to carry 9,500 passengers, was heralded as ushering in a new era of mega ships that could tap Asia’s growing cruising market.
Although some potential buyers are interested in only purchasing the Global Dream to add to their fleet, others are keen on a Genting package that gives them access to the Asian market, said Mr Morgen.
Most of the interested parties are cruise ship companies or operators backed by private equity, he said. Some serious investors have already signed non-disclosure agreements to engage in talks.
“There are potential buyers looking at an entry package to enter the Asian cruise ship market by buying Dream cruises as a business plus vessels currently operated by Dream cruises, plus Global One and potentially Global Two,” said Mr Morgen, referring to the mega ships by their original generic names.
Billionaire Lim Kok Thay, Genting Hong Kong’s recently resigned chairman and chief executive, expressed early interest in purchasing the ship, said Mr Morgen.
The sale is not contingent on the buyer completing the ship’s construction at the Wismar shipyard where it now sits, he said.
The ship was about 72 per cent finished when the German government and Genting could not agree in December on plans to finance $620 million to help complete it and keep the shipyard in business, according to a letter Mr Kok Thay wrote to creditors in January.
Genting had a written plan by mid-2021 to wind up MV Werften and place it in a “solvent liquidation”, said Mr Morgen.
The fully financed plan detailed how MV Werften would pay all its creditors in the liquidation process, and the plan had been analysed by an independent auditor. It was decided that Global Dream would be the last vessel built by the shipbuilder and the company had stopped taking in any new customers, Mr Morgen said.
Although there was still some hope that alternative scenarios could be developed in order to continue operations, there was “no permanent continuation of the MV Werften business”, in the plan, Mr Morgen said.
“MV Werften planned to finish construction of the vessel, repay all debt, repay the state and have some equity value left,” said Morgen.
German Economy Minister Robert Habeck said his government did everything in its power to save MV Werften.
Mr Habeck said on Monday that the government would be willing to subsidise the final construction of the Global Dream with a “new reliable investor”.
If a buyer for the Global Dream contributes 10 per cent of construction costs, there is a “real chance” to secure the construction financing from the existing construction financing lender and convince the state to guarantee it, said Mr Morgen.
