Jan 30, 2015 Newsdesk Latest News, Rest of Asia, Top of the deck  
Boutique casino operator Donaco International Ltd has agreed to acquire the Star Vegas Resort and Club casino property in Poipet, Cambodia, for a consideration of US$360 million.
The firm said in a filing to the Australian Securities Exchange that the deal would be closed by April, subject to due diligence and other regulatory approvals.
Donaco is currently a one-property operator, running the Aristo International casino hotel in Lao Cai, in northern Vietnam.
The vendor in the deal that was announced on Friday will manage the Star Vegas Resort and Club for a further two years post acquisition, according to a Donaco investor presentation accompanying the announcement.
The vendor was named as Star Vegas Resort and Club in the Donaco filing giving news of the acquisition. The investor presentation mentioned that the target business’s “key casino management staff are ex-Genting”. That is understood to be a reference to the Malaysian conglomerate Genting Bhd, which through several of its business units runs casino operations in Asia, the United States and the United Kingdom.
The terms of the deal include US$120 million in equity – circa 147 million shares – issued to the vendor; US$40 million in existing cash on hand; US$100 million in new debt; and US$100 million in equity financing via an entitlement offer – i.e. a share offering that is non-transferable, is offered at a specific price and must be used during a set time frame. The entitlement offer is at AUD0.60 (US$0.47) per new share.
The US$360 million acquisition price is approximately a six times multiple of the target property’s earnings before interest, taxation, depreciation and amortisation (EBITDA), said Donaco.
Analysts Grant Govertsen and Felicity Chiang of Union Gaming Research Macau Ltd said in a note: “This acquisition is transformational in that, on a pro-forma basis, it would increase the company’s EBITDA to AUD92 million…an increase of nearly 500 percent.” They noted that Star Vegas Resort and Club would add AUD76 million to the AUD16 million from current operations at Donaco’s Vietnam property.
“With the addition of Star Vegas, Donaco will have assets on both the Chinese (via Lao Cai, Vietnam) and Thailand (via Poipet, Cambodia) borders,” added Union Gaming.
Neither mainland China nor Thailand allow casinos within their borders, leading some tourists from those countries to visit respectively Vietnam and Cambodia to gamble.
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