Sunday, June 26, 2022

No fanfare for Imperial Pacific resort opening, amid protests


Hong Kong-listed Imperial Pacific finally opened the casino portion of its $3.1-billion IR project on the Pacific island of Saipan on July 6, though the group still faces hurdles in completing the resort.

The company’s local unit, Best Sunshine International, won the license in 2014, beating out rival Marianas Stars Entertainment after an acrimonious campaign. The ambitious plans for the resort envisage a three-stage rollout. The first phase covers a surface area of 140,000 sq meters and includes the casino and a 329 room hotel with 15 luxury villas.

Designed by Steelman Partners, the resort features an ornate gold and white-styled facade, and is perched on the waterfront at Garapan.

However, only the casino portion of the resort opened on July 6 after holding a preview in April. It opened with about 70 tables and 190 machines. Casino gaming director Scott Morrow said on a media tour that it is operating 48 baccarat tables: six blackjack and two Texas Hold ‘Em, with plans to add eight more.

It is also offering two roulette tables; eight sic bo; poker carnival games; pai gow and three-card poker.

As of the end of last year, total investment to date had been $343 million.

The company had been operating out of a temporary facility at the luxury T-Galleria mall, with just 48 tables and 141 slots, which has now closed. That property was generating eye-popping levels of turnover. Last year, it reported $32.3 billion in VIP rolling volume from just 16 tables. Its monthly rolling figures were consistently topping $2 billion and hit a peak of $3.9 billion in September 2016.

Imperial Pacific said last year that further growth in rolling volume has only been held back by a lack of capacity at the temporary facility.

Located just four hours from Shanghai, the company expects the idyllic natural environment and 45-day visa waiver for Chinese tourist to be major draws. However, it has been hit by a series of problems, which have caused delays. A major typhoon which swept across the islands in 2015 created a scarcity of raw materials and affected infrastructure, while one of its main contractors is under investigation by the Federal Bureau of Investigation for hiring illegal labor, taking on Chinese workers who had entered as tourists.

Despite the buzz generated around the project, the casino opened with little fanfare. About 300 guests were believed to have been in attendance, mostly Chinese visitors.

“Imperial Pacific has committed to the development of world-class investment and high-end entertainment projects In Saipan,” CEO Kwong Yiu Ling said in a press release marking the opening. “We are very excited to transfer to the Imperial Pacific Resort Hotel・Saipan.  It is our first milestone and will definitely help to launch a new era of luxury in Saipan.”

The opening was also hit by protests from Chinese workers who claimed they have not been paid back wages by one of the company’s contractors. They have been fighting since December for their pay. IPI has recently tightened its practices regarding illegal workers, taking on Island Protection Services to guard the site and enforce rules.

In late June, the company told the Hong Kong Stock Exchange that it will use HK$39 million of the net proceeds from a $50 million convertible bond sale to pay contractors, including $7 million to pay staff.

There is also concern over whether the company will be able to raise sufficient funding to complete the rest of the project. Both Moody’s Investors Services and Fitch Ratings have downgraded their ratings on the company’s debt.

“The downgrade of the final ratings reflects the company's need to fund advances to customers and bear customers' credit risk due to the lack of licensed junket operators in Saipan,” Fitch said in a note at the time. “In addition, the company has still not secured sufficient long-term funding for the construction of its casino and resort.”

The company said in its annual report that it expects to begin working with junkets once they are granted licenses. It says it has received 18 expressions of interest, though so far only one has been approved.

This is the first casino on Saipan and the second in the Commonwealth of Northern Mariana Islands after Tinian Dynasty Hotel & Casino, which remains closed after the U.S. Department of the Treasury’s Financial Crimes Enforcement Network discovered the latter violated federal anti-money laundering laws. Two more casino investors—Alter City Group and Bridge Investment Group—are in the process of completing their respective casino-hotel projects also on Tinian.

 

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