Chinese developer bets on high yield bond for Saipan casino
SINGAPORE: A proposed highyield bond from a Chinese company is set to offer investors exposure to a new gaming market in the little-known US territory of Saipan.
Saipan, an island in the Commonwealth of the Northern Mariana Islands, is the closest US territory to China and measures just 12.5 miles by 5.5 miles.
The site of a battle in World War II, it legalised casinos in 2014 and is reinventing itself as a destination for Chinese tourists, who are granted 45-day visas on arrival.
Credit investors have had the chance to gain exposure to casinos in Australia, Macau, the Philippines, Malaysia and Singapore through US dollar and Asian local currency bonds, but this deal will open up a new territory and another way to gain exposure to Chinese gamblers.
Chinese developer Imperial Pacific International Holdings is building a hotel and casino on the island, and this week held investor meetings through joint global coordinators Credit Suisse, SC Lowy and Jefferies ahead of a proposed US dollar Reg S senior secured bond.
The notes are expected to be rated B1/BB- (Moody’s/Fitch) and will be issued through a subsidiary, Imperial Pacific International LLC (Saipan).
The bonds are secured by the issuer’s casino assets and resort under construction, and guaranteed by the parent and the owner of the lease of the land.
The company needs around US$380 million to finish the project and is said to be targeting around $300 million from the bond issue. Bond proceeds will be kept in an issue account that will be used only to fund construction of its Grand Mariana integrated resort via a disbursement account.
If Imperial Pacific raises other funding, this will also be added to this disbursement account, which will maintain a minimum balance of $480 million before any funds can be used for other purposes, providing a buffer of US$100 million against cost overruns. All accounts are pledged to the benefit of prospective investors.
The company will also hold 12 months’ worth of bond coupon payments in a separate interest reserve account.
Imperial Pacific used to be a processor of frozen food, but discontinued that business in May this year, according to its interim 2016 annual report.
Its flagship project will have fivestar accommodation in 340 hotel suites, including 15 luxury villas, with more than 200 gaming tables and 350 slot machines, according to the company website.
Though the project is still under construction, Imperial Pacific opened a temporary casino in a duty free shopping centre on Saipan in November last year, and generated revenue of around HK$4 billion (US$516 million) from its integrated resort development business in the six months ended June 30.
It expects to open the resort in time for Lunar New Year 2017, with the hotel opening by March 2017, and anticipates having nine restaurants with a lofty target of 17 Michelin stars between them, according to its interim report. Macau connections
Fitch noted that Imperial Pacific is allowed under Commonwealth law to pay up to a 1.8 percent rebate to VIP customers, its main target audience, which is higher than the rates paid in most Asian countries.
The Saipan casino is expected to make use of junket operators, as is common in the Chinese territory of Macau. There are no restrictions on the number of tables that Imperial Pacific can operate, and it could potentially open more casinos on Saipan in the future.
Neighbouring island Tinian has allowed casinos for decades, but one of them ran into trouble last year for breaches of US anti-money laundering legislation. Hong Kong Entertainment (Overseas), operator of the Tinian Dynasty Hotel & Casino, entered into a non-prosecution agreement and forfeited US$3m to the United States Attorney after undercover agents from the Internal Revenue Service exposed breaches in antimoney laundering controls.
Imperial Pacific said it had hired an international accounting firm to review its anti-money laundering procedures and would provide extensive training to all employees.
The company’s board should be familiar with US laws: one independent non-executive director, Eugene Sullivan, is a retired US federal judge who served on President Nixon’s legal defence team in the Watergate case in 1974, and another, James Woolsey, was director of the CIA under President Clinton.
Its chief compliance officer, Vic Choi, was formerly head of compliance at HSBC Bank (China) and once served as a senior inspector in the Hong Kong Police Force. -- Reuters PUTRAJAYA: The development of the Mass Rapid Transit (MRT) Sungai Buloh-Serdang-Putrajaya line will enable the construction industry to continue its doubledigit growth momentum moving forward.
CIDBHoldingsSdnBhdChairman Datuk Seri Dr Judin Abdul Karim said the sequence continuation of the MRT SSP line work from the MRT Sungai Buloh-Kajang (SKB) line is healthy for the industry growth.
“It is very important to have continuity because we do a complicated work like tunneling where we use heavy equipment, which requires a lot of skilled people with high technology.
“When we have trained people to do tunneling (work) for example, and if we don’t continue with such work, we may need to find new people when another job comes along,” he told reporters after the MRT SSP line ground-breaking ceremony on Thursday.
Judin said the sequential continuation of the MRT project from the SKB line to the SSP line would ensure continuity for the workers and machinery used in the industry.
“That means the companies (involved) can invest in talents and retain them as they are almost assured of another job.
“In that way, the companies can build skills and competitiveness.
Once we have this, we can also compete internationally,” he added.
He said that it would be easier for local companies to export their homegrown talents overseas as their knowledge of handling the latest technology is still fresh.
“Many western countries may have advance technologies but they have not done projects that require such technology (of late).
Unlike us, we have just done it and our people’s knowledge about the technology is still fresh,” he said.
The 52.2 km MRT SSP line, which will be built at the cost of RM32 billion, is expected to be fully completed by the second quarter of 2022, while the SKB line, spanning 51 km, is now at 89 per cent completed and scheduled to be fully operational by July next year.
Meanwhile, Chief Secretary to the Government Tan Sri Dr Ali Hamsa said the MRT SSP line would help ease travel for civil servants living in Putrajaya, Cyberjaya and Serdang, and working in Kuala Lumpur.
“We have approved about 12,000 apartments and houses for civil servants here. So, civil servants, who are working in the Klang Valley, can make use of this line in the future,” he said. — Bernama
The Saipan casino is expected to make use of junket operators, as is common in the Chinese territory of Macau.There are no restrictions on the number of tables that Imperial Pacific can operate, and it could potentially open more casinos on Saipan in...
The sequential continuation of the MRT project from the SKB line to the SSP line will ensure continuity for the workers and machinery used in the industry. — Bernama photo