IPI outlines array of new revenue, funding sources

Editor’s Note: Reprinted with permission

The parent company of Saipan casino operator Imperial Pacific International (CNMI) LLC has outlined several new sources of revenue and funding as it looks to avoid revocation of its Saipan casino license and resume operations at Imperial Palace Saipan.

Ahead of a meeting with the Commonwealth Casino Commission next month to determine the company’s fate, Imperial Pacific International issued a clarification announcement on Monday in which it addressed issues giving rise to a disclaimer of opinion on continuing operations contained in its 2020 Annual Results. The company has not yet released its audited results for 2021, although its preliminary results showed a fiscal year loss of US$88 million.

Notably, IPI said its controlling shareholder, Inventive Star Limited, wholly-owned by former chairwoman Cui Ji Lie, and other related parties have undertaken to provide additional funding to settle the group’s “operational needs, liabilities, potential liabilities related to litigation, the casino annual license fee and the social benefit fund and capital investments as and when necessary.”

Failure to pay its annual US$15.5 million license fee and US$20 million social benefit fund contribution in 2020 were key reasons for the company’s license being suspended in April 2021, and repayment is likely the only measure that might save IPI’s casino license from being revoked.

The company also said it had received an indicative offer in respect of a credit facility of US$100 million from an unnamed independent financial institution, which will be valid until Sept. 27, 2022, and “has been approaching certain major lenders and bond and note holders to renew certain other borrowings and unsecured bonds and notes which were originally due for repayment in 2021, for extension of the repayment tenure to 2024 and/or beyond.”

Dept options aside, IPI revealed two new revenue streams it says are already locked in. The first relates to an agreement with an independent third-party travel agency to underwrite the occupancy of 250 hotel rooms and 15 villas at Imperial Palace Saipan for a term of four years at an average daily rate of US$1,060 per hotel room and US$2,400 per villa. IPI said this will guarantee HK$600 million (US$76.5 million) in revenue per year.

Another deal has been inked granting exclusive rights to operate a shopping mall covering 8,000 square meters at Imperial Palace Saipan for four years, with IPI stating it is entitled to 51% of gross margin on a guaranteed minimum of HK$20 million (US$2.5 million) per annum.

On issues around impairment loss on property, plant and equipment also included in the 2020 disclaimer of opinion, IPI said it has engaged a valuer to assess the value of completed and non-completed sections of Imperial Palace Saipan.

It also claims to have entered into construction agreements with “several independent construction companies to complete development of the integrated resort within 24 months after all COVID-19 measures implemented by the local government [are] lifted.”

COVID-19 restrictions in the CNMI have been easing in recent weeks with reports suggesting remaining restrictions could be done away with sooner rather than later.

IPI said last week it was still confident in its ability to reopen its casino and finish construction of its Saipan integrated resort.

This article was originally published in the Inside Asian Gaming website. Here is a link to the original article: https://www.asgam.com/index.php/2022/04/05/imperial-pacific-outlines-array-of-new-revenue-and-funding-sources-says-outstanding-license-fees-could-be-repaid-in-final-bid-to-save-saipan-casino/

Ben Blaschke (Inside Asian Gaming)