Japanese investment firm GCM Ltd. will provide a welcome infusion of capital—a reported $500 million—to beleaguered Saipan casino operator Imperial Pacific International. The funds could help IPI complete Phase I of its long-stalled Imperial Palace Saipan, the only casino in the Commonwealth of the Northern Mariana Islands in the Pacific.
The news was first reported on Inside Asian Gaming and later picked up by the Saipan Tribune. The transaction was reported in a filing by IPI to the Hong Kong Stock Exchange, one day after the CNMI Lottery Commission agreed to again amend portions of the casino license agreement.
IPI had asked commissioners to amend the shareholder controlling interest. That would allow IPI to bring in new funds and diversify the company’s portfolio. IPI must maintain a controlling interest of 51 percent or above.
According to the reports, GCM has already deposited $100 million.
IPI CEO Mark Brown says the company has invited hundreds of investors to be a part of its multimillion-dollar projects in the CNMI. IPI hosted 200 investors this spring and 100 more are set to arrive soon.
“They are looking at our company and what our plans here,” said Brown. “To have more investors and basically to have more partners coming in to Saipan so our company grows and the CNMI grows with it.”
Earlier this month, Brown said the company’s recent takeover of the Marianas Resort & Spa is a positive sign for the embattled company, plagued in recent years by headlines about sky-high VIP debt, illegal construction workers, missed construction deadlines, destruction from storms and other setbacks at its Imperial Palace resort.
It will take a lot of positive developments to offset years of negative reports about the company’s Saipan operations. IPI posted a loss of nearly HK$3 billion (US$382 million) in 2018, and has written off more than HK$9.7 billion in player debt. It still carries almost HK$5 billion in debt, “more than five times its reported profits since opening a temporary casino in a shopping mall in July 2015,” according to Forbes. “Worse, its partly built hotel in Garapan, Saipan’s central tourist district, is an eyesore, a federal case and to some, a desecration. After providing more than half the CNMI budget in fiscal 2018, IPI is failing to deliver the government revenue, a justification for casino legalization despite consecutive referendums that voted no. Deemed too big to fail, IPI is failing.”
The magazine quoted an email from local legislator Tina Sablan in which she wrote, “Since October 2018, the government has collected just $41,000 in casino gross revenue taxes” from IPI. “That’s it. And just so we are clear that I am not missing zeros in that number, that’s forty-one thousand dollars.
“We’ve gone through the first half of the fiscal year, and that’s all that IPI has paid. Compare that to nearly $44 million in casino GRT in 2018, and about $68 million in 2017—taxes that went to retirees’ pensions, public schools, the hospital, infrastructure. The impact of this sudden tumble in collections is huge.”
The company has blamed devastation from Typhoon Yutu in October 2017 for part of its woes. But iGamiX Director of Casino Operations Eric Coskun told the magazine, “IPI’s main problem is their business model, it is utterly unsustainable. Almost all of their efforts are focused on the top end of the VIP market, yet most experts know that top level VIP players have a shelf life of two to three years, and most of these top level players usually play on credit.”
