In a move to save the cash-strapped Tinian Shipping & Transportation Inc. from losing its two vessels, the Tinian Casino Gaming Control Commission has issued a resolution allowing its parent company, Hong Kong Entertainment Ltd., to execute a leasehold mortgage on the real estate property where its hotel casino is situated in favor of the Clerk of Court of the U.S. District Court.
Hong Kong Entertainment owns a lease on some 125,457 square meters of lot now occupied by Tinian Dynasty Hotel & Casino on the island-municipality of Tinian.
This shall be mortgaged to the Clerk of Court as security for the release of M/V Tinian Express and M/V Saipan Express, which have been ordered seized by the Federal Court due to failure of Tinian Shipping & Transportation to settle its debt to Debis Financial Services Inc. Tinian Shipping is 100 percent owned by Hong Kong Entertainment.
During Friday’s court hearing, the counsel for Tinian Shipping has proposed the leasehold mortgage as substitute security for the vessels. The seizure of the vessels prohibits the company from generating the funds needed to defend or negotiate for a settlement of the case, according to Atty. Anthony Long, counsel of Tinian Shipping.
Debis Financial, however, is not interested on the leasehold mortgage as substitute security for the release of the two vessels as it asked the court to order an interlocutory sale because the vessels are already deteriorating.
U.S. District Court Judge Alex Munson denied the application for sale to give Tinian Shipping time to respond to the case and placed the application for substitute security under advisement.
Tinian Shipping said it has made substantial efforts to obtain bonds or letters of credit from international financial institutions but it has been difficult for the company to attract financiers without the vessels.
Debis Financial claims that Tinian Shipping owes the company $7,566,511.33 in principal, together with accrued interest through Feb. 28, 1999 in the amount of $11,555.06 and $75,314.08 in late charges.
Tinian Shipping has admitted that it has not paid the entire amount but maintains that Debis has no right to foreclose on the ship’s mortgage.
Due to Tinian Shipping’s failure to obtain substitute security either through a bond or a letter of credit, it spends $20,550 a month to keep the vessels on Tinian and pay the appointed court custodian, Allied Marine Surveyors.
Two months after the court ordered the seizure of the two ferries, Long said the vessels are still in good condition and that their value have not been diminished.
In a related development, the local people on Tinian have petitioned the court to release the two vessels, saying they have been confronting difficulties bringing supplies and workers to the hotel and casino resort.
With the suspension of ferry service, the occupancy rate of the hotel casino has drastically declined, and Dynasty owners said they fear this would deeply hurt their projections and contribution to the local government.
“This translates into a disaster for Tinian as our local budget, which runs virtually all Mayor’s Office programs for the benefit of our community, is dependent almost entirely upon the taxes paid by the Dynasty,” stated the petition which was signed by 292 residents.