GGRAsia – Donaco looks to unlock value to chop US$40-mln debt

Donaco looks to unlock value to chop US$40-mln debt

Dec 13, 2018 Newsdesk Latest News, Rest of Asia, Top of the deck

Casino resort operator Donaco International Ltd says it is considering what to do about a US$39.9 million debt to Mega International Commercial Bank Co Ltd, secured against the assets of its Star Vegas Resort and Club (pictured) in Poipet, Cambodia.

Donaco told the Australian Securities Exchange on Thursday the board would undertake a strategic review of up to three months to investigate ways to free up cash.

“The board is currently conducting a strategic review to consider various ways to eliminate or restructure the Mega Bank debt, and free up cash flow to conduct capital management initiatives,” Thursday’s statement said.

The company’s share price appears to have contributed to the review, with the board saying the “current share price is in no way reflective of the value of the company’s assets”. Donaco shares were trading at about AUD0.07 cents (US$0.05) midway through yesterday’s session.

“Discussions are currently being held with several parties who have put forward proposals to unlock the value of the company’s assets, and provide value to shareholders,” the statement said. “To assist the board to consider the various proposals, the board is currently in discussions with potential strategic advisers.”

The company said it expected the review to take about three months and that it would keep investors informed about its progress.

Donaco said its debt to Taiwan’s Mega Bank was secured only against the assets of its Star Vegas business in Cambodia. Donaco has casino and hospitality operations in Vietnam, near the border with mainland China’s Yunnan province, and in Cambodia’s Poipet, a city near the border with Thailand.

Donaco is engaged in a dispute with three Thai businessmen who once owned the Poipet casino, the Star Vegas Resort and Club. Donaco says the former owners are breaking an agreement with the company by running two competing casinos. The company has taken the dispute to arbitrators in Singapore and is airing its side of the argument in the Australian courts. Donaco is seeking damages against the three men for at least US$190 million.

The company announced a loss after tax of AUD124.5 million in its financial year ended June 30. The sum takes into account a non-cash impairment charge of AUD143.9 million in the value of the licence for the Star Vegas business, the charge being a consequence of the dispute.

Earlier this month, the company announced its managing director and chief executive, Joey Lim Keong Yew, was taking three months of leave for health and other reasons and his brother, Ben Lim Keong Hoe, a non-executive director, was taking his place.