Chi­nese de­vel­oper bets on high yield bond for Saipan casino

The Borneo Post (Sabah) - - BUSINESS -

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

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