Vancouver casinos hit by crackdown on illicit money
Luxury casino Parq Vancouver’s parent company missed an interest payment on a second-lien loan as it struggles to refinance debt taken on to build one of the largest-ever private developments in British Columbia.
Parq Holdings LP was downgraded to selective default from CCC by S&P Global Ratings Thursday after the expiry of a 30-day grace period. The rating company attributed Parq’s decision to defer payment to its operational underperformance -- which has affected the company’s liquidity and its ability to service its debt -- as well as struggles to complete a proposed refinancing of its existing capital structure.
“Parq is solidly on track to close a new equity and finance package, replacing our existing development and construction financing,” the company said in an emailed statement.
A crackdown on money laundering in British Columbia -- Canada’s western-most province -- has caused turmoil at Vancouver-area casinos, which for years were known for accepting cash from gamblers arriving with suitcases and hockey bags bulging with bills. Casinos have reported lower revenue and table drops since new rules to more tightly identify sources of funds were implemented last year.
Business has been slower than expected at Parq Vancouver -- whose late 2017 opening coincided with the crackdown -- and complicated plans to replace costly construction financing with cheaper loans. It lost nearly $153 million in 2018, according to a March 28 filing by Dundee Corp., one of Parq Holdings’s two owners.
Parq had aimed to refinance the debt and bring in a new partner by April 30, according to Dundee filings. The company is still current on required interest and principal payments for its first-lien senior secured term loan, according to S&P.
“We will reevaluate our ratings on the company once it successfully executes the proposed refinancing of its existing capital structure,” S&P wrote in a note.