Casino Collusion in Chile: The Bond Implications

Casino Collusion in Chile: The Bond Implications

October 2024 - Chile’s casino industry has been shaken by a major collusion scandal, implicating key players like Enjoy S.A., one of the country’s largest casino operators. The “Casino Collusion Case” revealed illegal agreements among major casino operators to manipulate bidding processes for casino licenses, disrupting fair competition in a market generating over $550 million USD annually. This corruption undermined consumer trust and the integrity of the industry.

While the scandal has caused significant repercussions in Chile, its international impact has expanded due to a $300 million bond that Enjoy issued in 2017. This bond, issued under Rule 144A and Regulation S of the U.S. Securities and Exchange Commission (SEC) and the U.S. Securities Act of 1933, was aimed at financing the company’s expansion. More recently, in 2020, Enjoy placed an additional bond in the U.S. market, also valued at $300 million, with a 10.5% annual interest rate. 

However, the collusion case has raised questions about whether Enjoy, and its president, Mr. Henry Comber, fully disclosed the company's involvement in these illicit activities to U.S. investors during the bond issuances. This situation places the case under the jurisdiction of the SEC, which mandates transparency regarding material legal risks. If Enjoy is found to have withheld critical information, the company could face fines, sanctions, and potential lawsuits from investors." This version clarifies that both the company and its president are potentially implicated in the lack of disclosure and strengthens the phrasing around the legal risks.

In addition to the bond-related issues, Enjoy’s financial difficulties became more pronounced in 2020 when it initiated a Judicial Reorganization Procedure under Chile’s Law No. 20.720 on Reorganization and Liquidation of Companies and Individuals. Enjoy also filed a voluntary petition in U.S. courts under Chapter 15 of the Bankruptcy Code, seeking recognition of the Chilean reorganization in the United States to protect the company and its guarantees in the U.S. market. The United States Bankruptcy Court for the Southern District of New York recognized the Chilean reorganization as a foreign main proceeding, granting it legal protections in the U.S.

The SEC’s involvement, alongside the reorganization under Chapter 15, complicates Enjoy’s financial standing. As the scandal unfolds, the company's ability to access international financial markets is at risk, potentially affecting both its business operations and investor confidence. With these developments, the case could lead to broader regulatory reforms, reinforcing the need for transparency in both Chilean and global financial markets.