Dream Cruises Files for Liquidation After Defaulting on Debt
Dream Cruises filed a so-called winding up petition with the courts in Bermuda on January 27, making it the latest part of Genting Hong Kong to succumb to the financial troubles of the parent company.
Genting Hong Kong launched Dream Cruises in 2015 as a premium Asian cruise line building two cruise ships for the brand along with plans for a class of 208,000 gross ton cruise ships. In a stock exchange filing, Genting Hong Kong reported that the joint provisional liquidation filing for Genting Hong Kong “has triggered further insolvency events of default or termination events under all of the outstanding debt instruments of Dream Cruises Holding Limited.” Genting Hong Kong owned 65 percent of Dream Cruises after having sold a portion of the company to TPG Capital in 2019 and 2020 for nearly $500 million as part of a previous effort to strengthen the company’s balance sheet.
After filing for its own reorganization, Genting Hong Kong said that it hoped to keep Dream Cruises operating. The cruise line started sailing short cruises to nowhere in November 2020 aboard the 150,000 gross ton World Dream. They reported in the first year after resuming operations the World Dream operated 150 cruises carrying more than 200,000 passengers. During the summer of 2020 and again recently the 75,000 gross ton Explorer Dream was operating cruises around Taiwan while the line’s third cruise ship the 150,000 gross ton Genting Dream resumed operations in July 2021 sailing from Hong Kong.
Currently, the Hong Kong cruises are suspended due to government’s current COVID-19 travel restrictions. Yesterday, Dream Cruises announced that they were extending the cancelations for the Hong Kong cruises to mid-February due to the government’s social distancing requirements. Previously the cruise line had suspended the cruises from Taiwan as of January 24 due to Genting Hong Kong’s filing and on January 23 announced that all of its cruise ships would stop accepting new reservations till the beginning of February. At the time, the company said the pause was to give the liquidators time to “identify, examine and explore the options available to them in respect of the company’s future business.”
Genting Hong Kong continues to say that it believes “a consensual restructuring will present higher recoveries to all creditors and stakeholders compared to a value-destructive liquidation of the Dream Sub-Group, which is the likely alternative outcome.”
There has been speculation in Asia that billionaire business man Tan Sri Lim Kok Thay who started Genting and owns 76 percent of Genting Hong Kong, might attempt to repurchase the shares of Dream Cruises from the liquidators. Mr. Lim resigned last week from his position as Chairman, Chief Executive Officer and Executive Director of Genting Hong Kong.
The collapse of Dream Cruises is also creating further questions in Germany over the fate of Genting Hong Kong’s shipyard company MV Werften and the first of 208,000 gross ton cruise ships being built for Dream Cruises. Hamburg-based lawyer Christoph Morgen who was named preliminary insolvency administrator for MV Werften had said he had contacted Dream Cruises about purchasing the Global Dream cruise ship which is 75 percent complete and was due for delivery later this year. Morgen however also told the media in Germany that he was having preliminary discussions with other unspecified buyers for the cruise ship reporting he had completed non-disclosure agreements with the interested parties. He said he would be briefing them on the status of the construction and required step before seeking possible offers for the cruise ship.