Imperial Pacific Int’l to rent Imperial Palace hotel rooms as it tries to save casino

0

Posted: June 24, 2022, 5:28 a.m.

Last update on: June 24, 2022, 05:28h.

There is still no guarantee that Imperial Pacific International (IPI) will be able to retain its casino license for the Imperial Palace casino in Saipan. If so, however, he will not have complete control over the hotel’s ownership.

Imperial Palace Casino in Saipan
Imperial Palace Casino in Saipan under construction before its suspension. Casino operator Imperial Pacific International is trying to structure new deals to retain its license. (Image: World Casino Directory)

In a filing with the Hong Kong Stock Exchange yesterday, IPI announced that it was negotiating an underwriting agreement with Sino Travel Samoa Limited. The company is incorporated in Samoa and provides travel-related services including “the planning and sale of transport (sic), accommodation, insurance and other travel services covering Hong Kong, the PRC (People’s Republic of China), India and Samoa”.

Sino will be responsible for renting 250 hotel rooms and 15 villas at the Imperial Palace. He will also have to recruit or outsource a management team to manage the Imperial Palace hotel “like a 6-star hotel”. It’s not entirely clear what that entails because, according to Escape.com, the six-star rating “doesn’t officially exist.”

IPI believes the arrangement will help it start putting revenue into its pockets as it tries to convince the Commonwealth Casino Commission (CCC) that it is worth it. He has a lot of work ahead of him, because he still owes tens of millions of dollars in taxes, royalties, mandatory contributions to the government. It also owes more to private contractors than it ever paid.

great expectations

The deal will be in place for four years and will yield gross rental income of at least $104.39 million per year. Sino will cover this with monthly payments to IPI.

However, the struggling casino operator, whose own parent company has already suggested he give up the Imperial Palace, is glossing over a few key points. Given that, the arrangement isn’t as solid as IPI would have everyone believe.

First, IPI will not start receiving money right away. The agreement states that the tenure begins after the operator “has obtained all necessary licenses and approvals from Saipan authorities with respect to the operation of the Imperial Palace.” Because the CCC has suspended its license, IPI cannot define the plan with Sino in motion.

Moreover, IPI has based the revenues generated by the agreement on figures that seem grossly unrealistic and untenable. For example, the Imperial Palace design initially included at least 329 hotel rooms and 15 villas, according to IPI data. However, not all accommodations are ready, even if the property was open to the public.

IPI’s agreement with Sino calculates total value using an average rate of $1,000 per hotel room per day and $2,400 per villa per day. The figure of the villa is within the realm of possibility. However, finding enough customers to cover 250 hotel rooms at $1,000 a day for an entire year is impossible.

Therefore, Sino is either ready to lose tens of millions of dollars or something else happens in the deal. Either way, it’s an arrangement that regulators will be watching closely.

Imperial Palace outsources the shopping center

Separate from the agreement with Sino, IPI announced that it has signed an agreement with Jiadingsheng Supply Chain Management Co Ltd. This will lead to the creation of a joint venture to run a shopping center at the Imperial Palace. Subject to IPI receiving its license, the “Exclusive Cooperation Agreement” (ECA) will allow the mall to open from October 20 this year.

The mall will span approximately 1,000 square meters (10,763 square feet) on the ground floor of the Imperial Palace. IPI said it would receive a “guaranteed” annual income of $38.5 million. In addition, it will make a net profit of $2.6 million after four years of operation.

IPI and the Chinese company Jiadingsheng split the JV in favor of the casino operator. She will hold 51% of the company, while her partner will control 49%. This same allocation will apply to the sharing of net profits.

In its filing, IPI asserts that the underwriting agreement and the ECA are important. They allow him to show the CCC that he is making progress in generating income. However, as he points out, no agreement is legal and binding until the company has received its license. As such, he still hasn’t shown any additional resources to pay off his current astronomical debt.

Share.

Comments are closed.