IMPERIAL Pacific International’s parent company, IPI Holdings, has been collecting “receivables” but not sharing them with its subsidiary on Saipan, the Commonwealth Casino Commission said.
Imperial Pacific International Chief Executive Officer Donald Browne, right foreground, fields questions from Commonwealth Casino Commission officials during a meeting on Tuesday last week in the commission’s conference room in Gualo Rai.
Photo by Emmanuel T. Erediano
The casino commissioners raised this issue in a meeting on Tuesday last week as they asked IPI chief executive officer Donald Browne to explain why the parent company “never bothered” to send money to its casino on Saipan amid an increasing number of complaints over IPI’s failure to meet its obligations.
Commission Chairman Edward C. Deleon Guerrero and Commissioner Ramon M. Dela Cruz asked Browne if he has communicated with IPI Holdings regarding the $127 million in receivables that the parent company has collected from gambling debtors.
“I have no knowledge of that $127 million,” Browne replied.
Deleon Guerrero said the commission obtained a copy of IPI Holdings’ June 2020 audit report indicating that it collected $127 million in receivables, “which to my knowledge never found its way to Saipan,” Deleon Guerrero said.
“So have you opened up communication with them [IPI Holdings] that maybe they have been collecting but just did not bother to tell you?” the commission chairman asked Browne.
Browne said he would have to discuss the matter with IPI’s finance director, Frances Mafnas, adding that most of the account receivables are “over a couple of years old, and they, [the parent company] have written off a lot of those.”
Deleon Guerrero told Browne that the receivables collected by IPI’s parent company “are possible salvation, and yet either you or IPI here are unable to collect from your parent company.”
IPI, he added, must make an effort to reach out to its parent company in Hong Kong as required by the regulations.
Deleon Guerrero reminded Browne that the same regulations require IPI to file legal action against gambling debtors and guarantors with gaming credits that are 360 days old or older.
“I find it very hard and very unusual,” Deleon Guerrero said. “This is gaming…. If you are not financially suitable you shouldn’t be holding onto the license.”
Interim report
According to IPI Holdings’ 2020 interim report, it incurred a net loss of approximately HK$797,924,000 ($102.9 million) for the six months ending on June 30, 2020, and had net current liabilities of approximately HK$5,421,453,000 ($669.3 million), net liabilities of approximately HK$731,782,000 ($94.39 million), and capital commitments of approximately HK$511,958,000 ($66 million).
The report stated that “the Directors consider that the Group will have adequate funds available to enable it to operate as a going concern, based on the Group’s profit forecast and cash flow projection which, inter alia, take into account the past actual operating performance of the Group and the following:
“(a) As at the end of the reporting period, the Company has unutilized credit facility of U.S.$350,000,000 (equivalent to HK$2,712,664,000) from an independent third party for its working capital needs. The total facility amount is U.S.$500,000,000 (equivalent to HK$3,875,234,000), of which an amount of U.S.$150,000,000 (equivalent to HK$1,162,570,000) was drawn down as at the end of the reporting period;
“(b) The Company has obtained unsecured credit facilities in aggregate amounts of HK$490,000,000 from certain independent third parties;
“(c) Inventive Star and other related parties have undertaken to provide additional funding to finance the Group’s operations and capital investments as and when necessary;
“(d) The management will consider other financing arrangements with a view to increasing the Group’s capitalization/equity; and
(“e) The management will consider to refinance and/or rollover the Group’s existing loans with a view to improving the Group’s liquidity.”
The report further stated: “The Directors believe that, taking into account the above factors, the Group will have sufficient working capital to satisfy its present requirements for at least the next 12 months from the end of the reporting period. However, should the above financing be unavailable, the Group may be unable to continue as a going concern, in which case adjustments might have to be made to the carrying values of the Group’s assets to state them at their realizable values, to provide for any further liabilities which might arise and to reclassify its noncurrent assets and non-current liabilities to current assets and current liabilities, respectively. The effect of these adjustments has not been reflected in the condensed consolidated interim financial statements.”
Aside from lawsuits and other cases filed against IPI in federal court, the Saipan casino investor is also facing complaints about its failure to pay its obligations to the CNMI government.
