Asian Investors Look To Acquire CNMI Hotel-Casino

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Group could initially invest up to $180 million on Tinian

By Alexie Villegas Zotomayor

SAIPAN, CNMI (Marianas Variety, July 31, 2013) – A consortium of investors from Macau and Hong Kong wants to acquire Tinian Dynasty from its current owners in the Northern Marianas.

In an interview with Variety on Sunday, Mega Stars Overseas Limited chief executive officer Cario Hon confirmed to Variety the group’s interest in the full acquisition of Tinian Dynasty.

If they succeed in doing so, Hon says they may be investing from $150 million to $180 million initially.

Variety asked about the group’s combined assets, Hon said one of them easily tops the $500 million mark.

"We are talking of eight to 10 individuals of this asset size," Hon said.

However, Hon said two of these businesses will be involved in the startup.

His group, Hon said, is into both finance and marketing.

"We have the money and the marketing expertise," said Hon.

The capital needed to acquire the casino-hotel, he said, can be raised in the market.

"If you have a good project and good [business] projections, it is easy to get the money in the market," said Hon.

As to what prompted them to consider investing in the Dynasty, Hon said his business partners and Hong Kong Entertainment (Overseas) Investments Ltd. owners had met before and they learned then that the casino-hotel was up for sale.

Asked if Tinian Dynasty’s legal woes are of concern to them, Hon replied, "That is why we are doing our due diligence here both on the legal and financial side."

In this regard, Hon said they may require more time to conduct the process of due diligence.

But even in the face of the risks involved in the acquisition, Hon’s group is unfazed.

"Honestly, we know the risk. We are trying to help them settle their issues," he said.

Among these issues are the back wages of the Dynasty employees.

It was earlier reported that the employees missed up to nine paydays.

Variety learned that the employees had reason to celebrate recently as the Tinian Dynasty management was finally able to issue their pay checks.

Hon confirmed they did shell out the money to help the current owners resolve this issue with the employees.

He said their group is willing to help the Dynasty resolve all its issues.

For Hon, "We are looking at how best we can save the situation."

Currently, a team of professionals are sifting through records as they complete their due diligence during the negotiations.

If they were to acquire the Dynasty, Variety asked how they intend to deal with the two pending tax issues — one with the U.S. Internal Revenue Service and the other the unpaid tax obligations to the Northern Marianas government.

The U.S. Internal Revenue Service is seeking forfeiture of over $100 million in assets, stemming from the Tinian Dynasty’s failure to file currency-transaction reports or CTR’s, for transactions exceeding $10,000.

Hon explained to Variety that the reason the current owners are selling the casino-hotel is to retire all these issues.

He said the current owners want to put to bed these nagging issues before a real acquisition of Tinian Dynasty happens.

The CNMI government early this year called off an early arrangement made with Tinian Dynasty over the payment of its tax obligations to the government.

The arrangement called for settlement of tax obligations, reduced from $30 million to $6.1 million, within a specified time frame, which Dynasty was not able to comply with.

Moreover, as to the forfeiture claims by the IRS, Hon said, "It’s the existing owners’ problem and they have to settle it."

For Hon, "If the government does not allow us to go in, and does not allow them [HKE] to transfer it to us, then we can’t do anything."

He said it is beyond their control.

Hotel expansion

If they succeed in acquiring the hotel, the Hong Kong-Macau business consortium will be renovating it and adding at least 300 rooms.

Hon said Tinian Dynasty has a good foundation.

Variety learned that the owners of the casino-hotel spent over $120 million in constructing the hotel back in 1997.

As to the hotel’s structure, Hon sees they have a good foundation to work with.

Hon said they would like the hotel to be on a par with international standards.

"We are going to add more facilities in this area," he said.

He believes that the hotel alone does not suffice as an attraction to tourists.

"We plan to build a water world here," he said.

Hon showed Variety some of the conceptual plans they are considering as they look at the construction of a water park next to their existing pool.

He said this may become the biggest in the Pacific in terms of area.

For Hon, this should serve as a springboard to sell the hotel and the island, "to attract more visitors to come to Tinian."

After that we are going to increase the number of rooms.

Hon said they want to make improvements to the design and style of the hotel to suit the varied tastes of their clientele and diverse market.

"In the short term we are looking at adding 300 rooms," said Hon.

But if their plan were to reach full completion, Hon said they eye having 1,200 rooms.

Ferry service

Acknowledging that transportation has been the island’s major bottleneck in developing tourism and the gaming industry, Hon offered that if the CNMI government "will allow us, we can arrange direct flights."

Direct flights, Hon said, will obviate the need for tourists to transit from Saipan to Tinian.

Asked what they would do if the CNMI government were to approach them for help in resolving issues at the airport, Hon said they would readily provide help.

"Whatever we can do to help, we will be ready to assist the government," he said.

The resolution of the long-standing transportation woes on Tinian is part of the Hong Kong-Macau group’s acquisition plan.

Hon confirmed to Variety their plan to buy at least two 30-seat airplanes and one ferry boat.

Currently, Hon said two airplanes will suffice considering the market demand.

He said this will cut waiting time at the terminals and will bring in more tourists to the island.

He said it takes three hours to bring them over to the island.

Hon wants to cut travel and waiting time for the visitors.

"So it will be an hour or perhaps less in waiting time," said Hon.

On the issue of mass transportation, Hon said a ferry boat that can carry 200-250 people is being planned as well.

He said this will meet the lower-end market.

"So we can also help the whole island," he said responding to Variety as to whether this ferry is intended to bring cargo, aside from passengers.

Ferry service was discontinued in 2010.

"We need a ferry. We are planning to restart the ferry service," said Hon.

As to the previous ferry operation, Hon said, "I think they had the wrong kind."

Hon also said they would like to work closely with the CNMI government in this endeavor.

He said they heard the government is working on renovating the harbor to set up the ferry service route.

"I think it is also a good opportunity for us to start that too," Hon said.

With the acquisition still on the table, the group’s sights are set on the future.

They look forward to working collaboratively with the CNMI government in developing Tinian as a tourist destination.

"We want to build the destination. We want to help the government build a very nice destination. We don’t mind sharing our resources to help the island," assured Hon.

In Hon’s view, whatever they can do to help stimulate the development of the islands’ tourism industry and its economy, they will do.

Further, Hon believes that there is more to be done in attracting tourists to the island.

"We need more attractions on the island," said Hon speaking of the construction of facilities that will make Tinian a guaranteed tourist destination.

Retain employees

If they succeed in buying Tinian Dynasty, Hon said they would like to create 800 additional jobs.

At the VIP lounge of the Dynasty last Sunday, Hon showed why they want to keep the employees.

He told this reporter, "Swipe the wall with your index finger. See that it has no dust."

This, Hon said, is proof of the quality of the employees at the Dynasty.

He said that, although there is a shortage of manpower, the employees are doing very well in maintaining the hotel.

He said they will need to increase the number of employees.

"We need more of them," he said.

As to the completion of the acquisition, Hon said it was not up to them but he did reiterate their commitment to assist in the process.

"We’re here to help. We want to finish this deal successfully," Hon told Variety.

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