IAG December 2015

Cover Story
“In South Korea, Imperial Pacific
participated in the first round of
competition for two new licenses for
foreigner-only casinos. It was one of four
groups proposing an integrated resort
near the previously approved Caesars
Entertainment/Lippo IR site in Midan
City on Incheon’s Yeongjong Island.”
opening in 2011. Saipan voters twice rejected casinos in referendums.
Nevertheless, CNMI’s legislature legalized Saipan casinos in March
2014. Imperial Pacific subsidiary Best Sunshine International, then
led by former Genting Singapore General Counsel Terence Tay,
moved to secure the license, which requires development of an
integrated resort with a minimum $2 billion investment and 2,000
guest rooms. Even with an annual license fee of $15 million in lieu of
gaming taxes, the lofty investment requirement appeared designed
to dampen interest. Mega Stars, the Hong Kong-based owner of
Tinian’s casino also applied, leading to a spirited competition. Best
Sunshine promised a $3 billion resort and a $30 million community
development fund, including $10 million in direct payments to
Saipan citizens, and won the license.
Even though it had the only hand left in the game, Best Sunshine
raised the ante again in September last year, issuing a $7.1 billion,
five phase development plan encompassing 4,252 hotel rooms, 300
villas, 1,600 gaming tables and 3,500 slot machines at two sites, a
town hotel and a beach resort. To replace Mr Tay, who left shortly
after the license was granted, Imperial Pacific hired Mark Brown,
former president of Sands China and most recently chief operating
officer for NagaWorld in Cambodia, who was tasked with scaling
up junket operations. As Best Sunshine’s president and CEO, Mr
Brown secured a 59,000 square meter site for the town hotel that
will have 50 rooms, 300 tables and 500 machines in its initial phase.
Construction began in July, due for completion late next year.
To prepare gaming floor personnel, CNMI allowed Best Sunshine
to open a training casino in July, 16 months ahead of the projected
hotel opening date, in a shopping mall that caters to tourists.
Dubbed Best Sunshine Live, the temporary casino with capacity for
about 40 tables and 100-plus machines, added VIP operations early
last month, held its grand opening on November 27 and expects
to “commence collaboration with junket operators” this month,
according to Imperial Pacific’s filing with the Hong Kong stock
exchange. (In October, Imperial Pacific dropped its profit share
agreement with Hengsheng, tied to a HK$400 million convertible
loan, but company ownership remains linked to the junket.)
Imperial Pacific continues to search for a site for its larger resort
project. CNMI’s Department of Public Lands last month issued a
Request For Proposals on a 1.61 million square meter (398 acre) site
currently occupied by Mariana Resort and Spa, whose lease expires
April 30, 2018. Mr Brown says Best Sunshine “will be as heavily
involved as we possibly can be” in pursuit of the site. “We are here
on the island and we have proven the type of business and type of
neighbor that we are, so we are not going to sit back and watch
someone else go in for the RFP,” Mr Brown told local media.
Mariana Resort’s owner Kan Pacific, Saipan’s largest remaining
Japanese hotelier, dating to CNMI’s 1980s heyday as a getaway for
Japan’s middle class, has mounted a legal and grassroots campaign
to extend its lease. Kan Pacific lawyers charge the RFP violates lease
terms. Hundreds attended a public rally in support of lease extension.
“We expect robust competition for a parcel of this magnitude,”
Public Lands Secretary Pete Tenorio wrote in a letter to the Saipan
Tribune newspaper. “If Kan Pacific makes the best proposal, we
welcome them to continue to operate Mariana Resort. If not, we
welcome the bidder who proposes the highest and best use for the
entire premises that will generate the most income for the collective
owners of public lands.”
In South Korea, Imperial Pacific participated in the first round of
competition for two new licenses for foreigner-only casinos. It was
one of four groups proposing an integrated resort near the previously
approved Caesars Entertainment/Lippo IR site in Midan City on
Incheon’s Yeongjong Island. Imperial Pacific didn’t indicate whether
it joined the final proposal phase that was scheduled to close late
last month. However, Seoul based KORE Policy and Management
Consulting General Manager Tim Lee says that, days ahead of the
deadline, Imperial Pacific was one of just two groups that made the
$50 million deposit required to submit a proposal. Independent
activist investor and US corporate director Michael Levin, who has
worked in Korea, thinks it’s possible Imperial Pacific’s October
decision to drop its profit share agreement with Hengsheng, tied
to a HK$400 million convertible loan, divorcing it from the junket’s
operations, could be helpful to win licensing approval from Korean
regulators, even though Imperial Pacific’s ownership remains linked
to Hengsheng.
FIRST STEP
Suncity’s first move into casino ownership was announced in
March, as a partner with Chow Tai Fook Enterprises and VinaCapital
in central Vietnam’s Quang Nam province. Genting Group and
VinaCapital originally planned to develop an IR on the site, known as
Hoi An South, but Genting, a 20% partner, pulled out in 2011. Chow
Tai Fook, which owns 10% of STDM and is part of the Destination
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inside asian gaming December 2015