CNMI

IPI secures financing but construction deadline slips

Imperial Pacific said it believes it has adequate funds to cover its working capital needs for at least the next 12 months after a round of talks with lenders, though the operator has warned that it will not be able to meet the new extended deadline for completion of the resort.

The Hong Kong-listed operator posted a loss of HK$2.97 billion ($378.4 million) in 2018 from a profit of HK$637.5 million the year earlier after revenue plunged by more than 58 percent. VIP revenue, the mainstay of its operations, plunged 60.4 percent to $2.9 billion.

Imperial Pacific said its results had been badly affected by Typhoon Yutu in October, which shut down the island’s airport for a month; distractions from the FIFA World Cup in summer and also a tightening in marker credits as the group sought to get bad debts under control.

The group had net current liabilities of HK$4.74 billion and capital commitments of approximately HK$457.75 million as of 31 December 2018.

Despite this, “directors consider that the group will have adequate funds available to enable it to operate as a going concern,” it said.

Imperial Pacific recently secured HK$543 million in loans from independent third parties and agreed with lenders to extend the repayment terms on some $434.8 million, which had been due this year.

It also agreed to the refinancing of loans already overdue to the latter part of this year and secured $1.15 billion in credit facilities.

“The management is in discussion with certain potential investors with a view to secure long-term financing principally to be used to complete the remaining construction of the integrated gaming resort,” it said.

However, when the resort will be completed is still up in the air. At present, the operator is relying on three villas and four yachts, as well as rooms secured from high-quality local hotels to accommodate its VIP guests. The hotel room shortage on Saipan is impeding the company’s ability to attract higher volumes of guests and therefore completion of construction is key.

In March, Imperial Pacific’s vice president for construction Eric Poon told the local regulator that they will not be able to meet the extended deadline for completion due to an ongoing labour shortage.

After missing a deadline to get the first phase of the resort finished last August, the group negotiated a Feb. 28, 2021 deadline with regulators. The group has now said it expects a “partial opening” on Sept. 30th, but gave no details as to what facilities would be available.

Poon told the Commonwealth Casino Commission that Imperial Pacific only had 253 workers on site, about a quarter of the optimal number.

Saipan is facing a severe labour shortage after the U.S. Department of Homeland Security removed the Philippines from a list of countries eligible for the H-2B visa program.

The Philippines was one of the biggest source markets for the company for workers. Poon told the commission that teams were sent to recruit construction workers in Taiwan, Thailand, South Korea, Mongolia and other countries eligible for the H-2B program. Meantime, he added, the shortage of workforce “seriously impacts the current progress.”

In an interview, House Committee on Commerce and Tourism Chairman Joseph Leepan T. Guerrero said any further delay in the completion of the project may result in an increase in the cost of construction and procurement of goods and services needed by the casino.

Workers claim forced labour, human trafficking

Imperial Pacific is being sued by former construction workers, claiming they were victims of forced labor and human trafficking during their time with the company, Reuters reports.

Seven Chinese construction workers made the claim to the Federal Court in Saipan, seeking unspecified monetary compensation for their pain and suffering, as well as punitive damages.

The company has been plagued by labour issues, mostly relating to an external contractor who was illegally employing Chinese workers.

That contractor is no longer working with the company.

Saipan airport to get $121.1m in repairs, upgrades

Saipan’s main international airport, which was heavily damaged in last year’s Typhoon Yutu needs investment of about $121.1 million to upgrade facilities and restore services, local media reports.

Among the items that need to be replaced are loading bridges, the perimeter fence, the bus canopy to the commuter terminal, a storefront window and door, air-conditioning unit, waterproofing, rotating beacon, and flag pole. Repairs are needed for the commuter terminal, air traffic control tower, the Aircraft Rescue and Fire Fighting training facility, and incinerator facility. The terminal also needs to be repainted.

Another project includes $22 million for the replacement of CTX machines to scan luggage.