Struggling Saipan casino operator Imperial Pacific International (IPI) has only made partial payment of its annual gaming license renewal fee, raising fresh concerns over the company’s fiscal health.
On Monday, Edward Deleon Guerrero, director of Casino Control Commission (CCC) of the Commonwealth of the Northern Mariana Islands (CNMI), filed a complaint against IPI for only paying $5m of the $15.5m annual gaming license fee that was due on August 12.
Failure to pay the fee in full and on time is a violation of IPI’s 2014 Casino License Agreement (CLA) that could result in license suspension or revocation. The CCC plans to address Guerrero’s complaint at its next scheduled meeting on August 28.
The Marianas Variety quoted Guerrero saying IPI had been given 15 days in which to “cure the deficiency” in the company’s partial payment. Guerrero added that IPI could face fines of $50k for every day that the outstanding sum isn’t paid.
This isn’t the only payment that IPI has failed to remit in recent months. This spring, IPI CEO Mark Brown told the CCC that the company was reducing the amount of business gross revenue tax (BGRT) it’s required to pay the CNMI government based on IPI’s belief that it was owed certain ‘credits,’ a claim that the government disputes. IPI is also said to owe significant sums to local contractors.
IPI’s financial woes are no secret, underscored by the company issuing yet another profit warning last week for its upcoming H1 report card. The company’s controlling shareholder has been selling equity to provide access to new capital, despite previous reports that it had secured a $500m lifeline from a Japanese conglomerate.
IPI’s troubles are largely of its own making, having chosen early on to offer credit directly to its VIP gamblers rather than employ junket operators to share the risk. The company’s latest profit warning cited its inability to collect VIP gambling debts as the primary cause of its expected net losses for H1.
Despite its self-inflicted wounds, IPI’s senior management has publicly complained that “negative media articles” aren’t helping its ability to secure new investment and keep its ship afloat. The company is currently fighting a legal battle with the CNMI government to keep certain financial documents from being released publicly.
