Genting Hong Kong, which operates the Dream Cruises and Crystal Cruises brands, has asked its creditors to negotiate a debt restructuring as it seeks to prevent bankruptcy amid the worldwide cruise industry shutdown.

The company has suspended all payments to financial creditors and in a statement said that the remaining available cash will be used to maintain critical services for its operations, while negotiating a restructuring.

Genting owns Dream Cruises, which is building the 208,000-gross ton Global Dream cruise ship

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The company’s outstanding financial indebtedness was US $3.37 billion as of July 31st, 2020.

In a statement, the company said COVID-19 has had and continues to have a material impact on its financial position and results, suggesting the global shutdown of the cruise industry since March is the primary source of its financial difficulties.

Crystal Cruises is Genting’s luxury line operating two cruise ships

Genting Hong Kong is the parent company of three cruise lines, the luxury line Crystal Cruises, the Asian cruise line Star Cruises and the cruise line Dream Cruises, which is a Asia-focused mashup of Norwegian and Royal Caribbean.

Dream Cruises is currently building the 208,000-gross ton Global-class cruise ship Global Dream, which will feature the world’s longest roller coaster on a cruise ship.

In all, Genting Hong Kong operates a fleet of 15 cruise ships, in addition to a hotel brand and a shipyard.

Star Cruises is Genting’s more budget oriented cruise line

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The company says it has undertaken a number of cost reduction and cash conservation measures to mitigate the effect of the loss of revenues from its operations, but that its financial position has continued to deteriorate.

The company launched a fundraising effort earlier this year, but says it will require more time to assess possible additional funding.

A debt restructuring is a more cost-effective means than declaring insolvency of dealing with unmanageable debt, and does not necessarily imply that the company is in extreme financial distress.

World Dream in Taiwan

However, if negotiations with creditors do not produce results amicable to all parties, bankruptcy may be the only option left to the company.

The development underscores the unprecedented nature of the situation in which the global cruise industry finds itself. Just six months ago, it was one of the fastest growing and most profitable sectors of the worldwide travel market.

So far, two mainstream cruise lines, have declared bankruptcy due to the pandemic. Pullmantur, part owned by Royal Caribbean, and Cruise & Maritime Voyages.