SINGAPORE: Embattled cruise operator Genting Hong Kong has agreed to sell Zouk Group for S$14 million, as part of efforts to "aggressively minimise expenses and conserve cash" amid the COVID-19 pandemic.
Genting Hong Kong bought the nightclub operator from founder Lincoln Cheng in 2015 for an undisclosed sum. Zouk Group's other assets include Five Guys in Plaza Singapura and gaming bar RedTail at Clarke Quay.
Genting Hong Kong is selling Zouk Group to Tulipa, which is owned by Lim Keong Hui, the son of Genting Group chairman Lim Kok Thay.
Lim Keong Hui resigned as executive director and deputy CEO of Genting Hong Kong on Friday.
Genting Hong Kong, which owns Star Cruises, Dream Cruises, Crystal Cruises and also has a stake in Resorts World Manila, has been battered by the COVID-19 pandemic.
The company recorded a net loss of US$742.6 million in the first half of the year as the cruise industry ground to a halt because of the coronavirus.
"The catastrophic COVID-19 pandemic has caused an acute disruption to businesses worldwide and led the cruise and tourism industry to a sudden halt since February 2020," said Genting Hong Kong in a stock exchange filing.
"The disposal will enable the group to offload non-core assets and investment and provide liquidity to the group," it added.
As of Jul 31, the unaudited consolidated net asset value of Zouk Group was about HK$72.6 million (US$9.37 million).
It posted an after tax loss of HK$79.6 million for the first seven months of the year.
The sale price is subject to adjustment based on the cash level of Zouk Group.
The deal is expected to be completed by Sep 4, or a later date as mutually agreed by the buyer and the seller.
After the completion of the deal, Zouk Group will cease to be an indirect wholly-owned subsidiary of Genting Hong Kong.