BSI pleads for secrecy in financial rating process meeting

Credit rating experts are on island to vet the financial standing of the Saipan casino and are expected to issue a financial rating in the coming months.

Commonwealth Casino Commission executive director Edward C. Deleon Guerrero stressed yesterday these rating agencies were “third parties” and that they expect a rating out in the coming months. The agencies met with the casino, Best Sunshine International, Ltd, and the casino commission yesterday.

Rating agencies essentially rate a debtor’s ability, in this case the Saipan casino, to pay back debt on time and the health of its bonds.

It also ties into BSI’s ability to raise capital and finance its mammoth casino resort projects on island.

Notably, the names of these agencies and the very fact they are on island was a contention of public disclosure during a commission meeting yesterday.

Casino officials debated the extent of disclosure with commission lawyer Michael Ernest who defended the CNMI’s Open Government Act.

The much ado about disclosure centered on whether or not the “entire [public] meeting with the rating company” should be under executive session or be open for public disclosure, Deleon Guerrero said yesterday.

“Some of the agencies that were here today were not necessarily public information because as the [casino] company prepares to do its own financing—this is a publicly listed company—and anything they do particularly in the area of revenue generation, they have to follow the Hong Kong stock market rules and related procedures,” explained Deleon Guerrero.

Deleon Guerrero would not characterize the debate as a “disagreement” when asked, but said the casino took the position the finances involved “privileged propriety information,” and cited Hong Kong stock market rules and procedures that prevented this disclosure.

Nevertheless, the commission took that position “that anything that is not specifically confidential should be open to the public so that you folks the media can sit in and listen,” Deleon Guerrero said.

“…At all possible, we would like to make everything public through the Open Government Act,” he said.

Still, they “were asked not to identify any one of” the rating agencies, Deleon Guerrero also said.

“They’ve requested that pursuant to some sections of their publicly listed situation in Hong Kong that the mere fact that [the agencies are here] should not be for public disclosure.”

He did, though, disclose that officials from Morgan Stanley, Credit Suisse, among other groups, were present as “financial institutions.”

“Our concern is that we have an Open Government Act here and that we want to comply. In whatever we do we want it to be transparent.”

In the end, he said, the commission proceeded with discussion publicly. And only when they felt that the discussions were centering in on propriety most decided to enter executive session, he said.

“But there is nothing that the commission made as far official decisions and rulings, we cannot do that in executive session so none was made,” he added, saying that the commission had gone on recess and are meeting with the rating agencies again today and Thursday.

Cease-and-desist order

Deleon Guerrero was also pressed yesterday for an update on a meeting that the commission had with the Bureau of Environmental and Coastal Quality officials and construction contractors recently, over reported regulatory violations at the Grand Mariana Casino resort construction site in the heart of prime beachside in Garapan.

MCC International Saipan LTD is the prime contractor with the Grand Mariana and is also cosignatory to many of cargo construction goods that have arrived on island recently.

The company’s subcontractors, though, have presented issues with overstaying workers, and defecating on construction site beaches, among others, a highly placed source said yesterday.

This has prompted a “CEASE AND DESIST/ADMINISTRATIVE ORDER, signed by Frank Rabauliman, BECQ administrator, dated March 31, 2016, in reference to the Division of Environmental Quality (Complainant) vs. Imperial Pacific International (CNMI), LLC (Respondent) on Case No. DEQ WEEC 2016-AO-002” to be issued to the company.

“My understanding was that BECQ gave them a list of things to do and my understanding that is being discussed,” said Deleon Guerrero, when pressed for more information.

“My understanding is that BECQ has restricted them from working on the evenings and on Sundays until those issues that were requested to provided were provided,” he said. “So we don’t know what the status is.”

Request for comment from BECQ sent near press time yesterday was not immediately responded to.

The violations have to do “with the regulatory conditions that they did not meet,” Deleon Guerrero said, or “BECQ requirements as provided for in the permit.”

“And those that deal with wastewater issues,” he added.

The administrative order that prevents construction at evenings and weekends has prompted worry in the commission that this will slow down construction and cause the company to miss its target completion dates.

Deleon Guerrero said the licensee has planned to complete the Grand Marianas’ “gaming” side by December of this year.

“And we are concerned that the target date may not be met if they have any other stringent conditions added on by our other regulatory partners.”

“…There are some questions as to whether or not they can meet the scheduled date of completion,” he said.

If they do not meet that date, Deleon Guerrero said, this will become an issue for the commission as they are mobilizing staff to prepare for the additional slot machines, the additional gaming tables, and for preparation for all needed surveillance presence in the facility.

“That’s very much an issue for the commission,” he said.

Still, Deleon Guerrero insisted that whatever further regulatory decisions come out against the casino, the commission would play its role in enforcing these.

“…If they issue an order, we would expect the licensee to be in compliance of those orders—and if not—we will help them enforce them.”

“Whether [the orders come from] BECQ or the [attorney general] or whatever,” Deleon Guerrero said, “we are a government entity after all and we are all responsible to enforce the Commonwealth laws and regulations.”