Zouk's operator sold by ailing Genting Hong Kong

SINGAPORE - Ailing cruise operator Genting Hong Kong has sold the Zouk Group, which operates the popular nightclub, for $14 million as part of efforts to offload non-core assets and generate liquidity for the cash-strapped firm.

Malaysian firm Tulipa is buying the Singapore-based group, according to a filing on the Hong Kong Exchange on Tuesday (Sept 1) night.

Tulipa is owned by Mr Lim Keong Hui, the son of Genting Hong Kong's controlling shareholder.

Mr Lim resigned from the Genting Hong Kong board last week.

The cash sale is expected to result in a gain of about HK$6.7 million (S$1.2 million), which will be used as working capital, the filing said.

Concerns were raised over Genting's finances in July after it disclosed that it had suspended all payments to creditors.

The firm said then that cash flow had been impacted by the coronavirus pandemic and funds would have to be channelled to services critical to 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.

The Tuesday filing said selling the Zouk Group is part of effort to conserve cash and seek additional sources of finance to sustain the business, pending the resumption of cruise operations.

Home-grown nightclub Zouk, ranked among the top clubs in the world, was sold to Genting Hong Kong in 2015. The Zouk Group's other assets include the Five Guys burger joint at Plaza Singapura.

The group made a pre-tax loss of HK$79.6 million for the seven months to July 31 and had an unaudited consolidated net asset value of about HK$72.6 million as of the same date, it said on 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. After the transaction is complete, Zouk Group will cease to be an indirect wholly-owned subsidiary of Genting Hong Kong.

Genting Hong Kong last Friday reported a US$742.6 million (S$1.01 billion) net loss for the first half of the year, due in large part to port closures that have forced cruise lines worldwide to suspend sailings from as early as February.

Revenue for the six months was US$226.2 million, down from US$729.2 million in the same period last year.

The Hong Kong-listed company owed US$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 includes cost-cutting, scaling back capital expenditure, deferring loans, undergoing restructuring and seeking additional equity or debt funding from private investors.

It said it has already received interest for investment in one of its cruise brands.

Bloomberg reported last month that Malaysian tycoon Lim Kok Thay, the chairman of the Genting group, pledged almost his entire stake in Genting Hong Kong as collateral for loans after the firm suspended payments to creditors.

Malaysian conglomerate Genting's hospitality and gaming empire has been badly affected by pandemic-related restrictions, which have forced the temporary closure of casinos and put a pause on tourism worldwide.

Resorts World Sentosa, operated by Genting Singapore, laid off about 2,000 employees in July after the integrated resort shut for nearly three months.

This article was first published in The Straits Times. Permission required for reproduction.