Imperial Pacific International Holdings Limited has been downgraded by Fitch Ratings after concerns arose involving long-term construction funding for the Imperial Pacific Resort, formerly known by the working name Grand Mariana casino and resort. Although initially scheduled to open before the end of Chinese New Near (near the end of January) the company recently said that a soft launch of the casino would happen sometime in the first quarter of the year. A spokesperson added that construction “has been progressing smoothly, with over 2,000 workers laboring around-the-clock to ensure early completion.”

Yesterday, the rating agency stated that they believe IPI is on target to meet the deadline set for construction to be completed but longer-term CapEx funding for the casino and hotel resort has yet to be put in place. Failure to secure such funding for both construction phases may put more pressure on the liquidity of IPI.

Fitch lowered the Long-Term Foreign-Currency Issuer Default Rating to CCC when they were previously rated B(EXP) from September of last year. The proposed US dollar senior secured note issue of IPI has also been downgraded to B-(EXP) from BB-(EXP).

The downgrade is also reportedly a reflection of the need for the company to fund advances to customers and bear customers’ credit risk due to lack of licensed junket operators in Saipan. According to Fitch Ratings, so far, only one junket has gained licensing by the Commonwealth Casino Commission of Saipan. Because of this, IPI has been running their VIP segment via third-party introductions and internal marketing. The company is granting credit directly to such customers, with credit partly backed by guarantors. IPI’s unaudited VIP table games rolling for the year 2016 at the temporary Best Sunshine Live casino in Garapan was US$32.366 billion (HK$251.16 billion). That number represents the amount of betting or turn-over at the company’s VIP tables, not the casino’s profit from such play.

According to Fitch, they believe that the receivable days of IPI have expanded beyond 100 days in light of strong VIP rolling chips volume within the last six months. Operating cash generation will most likely be low, even though strong revenue growth has been seen. However, this cannot be absolutely determined through voluntary unaudited results.

 

One Response

  1. Lapi Lorres

    For those of you that do not reside on Saipan, we got news for you. There are only 200 workers at site, mostly illegal and under the process of being removed by US authorities. The construction site has been cited as unsafe and unless safety improvements come in place, it will be shut down by US federal authorities. The internal master schedule reported to the Public Works for completion is July 2017. They cannot open the casino because the mechanical works are completely messed up and they have no water. Imperial accounts receivables >100 days has ballooned to $750 million. The accounts payable are by six so call whales, who are family friends of Mr. Ji Xiao Bo, the Prince of Imperial Pacific, the son of Margaret Cui Li Jie, the majority shareholder of Imperial. These players were given liberal credit to boost up the rolling chip program so that investors think the temporary casino with six VIP rooms can generate more than Venetian Macau. No money was ever transferred to Saipan, making it a case of money laundering at best – all settlements in Hong Kong. Mr. Ji is reported to be involved in money laundering related to Simms Investment Services in Italy – now under investigation. Margaret Cui was never a property developer but a fixer laundering money in Yanbian under the Huang Sheng Group – categorized by the US Senate committee on money launderer. Imperial Pacific investment banker Shen Yan was associated with North East China money launders when he worked for Deutsch Bank and was fired for carrying an unlicensed gun at Hong Kong Airport. Mark Brown illegal activities are well known in the industry – check Stephen Jacobs deposition in his case against the Las Vegas Sands. The entire undertaking is a money laundering idea. The information about Shen Yan and Mark Brown is readily available in the internet. This is a scam that will devastate the financial standing of the Mariana Islands – materials are brought in from Asia on open credit which for many suppliers have gone over 180 days. Imperial got inside help with the island leaders and gaming commission but the US government will sooner or later put the scam at rest. If you need a higher return, go play US lottery or wait till the new casino in Palau comes online – co-developed by Imperial Pacific and the brothers of the Governor of Saipan. There – no US regulations.

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