GGRAsia – Mega Bank okays Donaco deal with Star Vegas vendors

Mega Bank okays Donaco deal with Star Vegas vendors

Dec 23, 2020 Newsdesk Latest News, Rest of Asia, Top of the deck

Donaco International Ltd, an operator of several border casinos in Southeast Asia, says it has gained approval from key lender Mega International Commercial Bank Co Ltd, known as Mega Bank, on the casino firm’s “settlement of all legal cases” with third parties, regarding Star Vegas Resort and Club (pictured), Donaco’s Cambodian casino venue.

An outstanding debt of USD$7.8 million payable to the bank was “a notable reduction from the initially-borrowed amount of US$100 million, and the company is on track to repay all the remaining debt in financial year 2021,” said Donaco in a Tuesday filing to the Australian Securities Exchange.

The approval by Mega Bank was in relation to the “successful settlement of all legal cases with the Thai-vendor” parties regarding Star Vegas, and was “part of the provisions of a facility agreement with the lender,” noted Donaco.

“Donaco is extremely pleased” regarding “securing this approval, as the company continues to work with Mega Bank and pay down the debt facility under the agreement,” the casino firm added.

For covenants under the Mega Bank facility, the minimum cash requirement has been lowered to US$7.8 million from AUD$20 million (US$15.1 million), Donaco said.

The firm further noted that interest cover and debt ratio covenants were “not required to be tested” as of December 31, and would only be tested as of June 30, 2021, the end of the firm’s current financial year.

“As such there are no remaining effective interest cover and debt ratio covenants, assuming Donaco will repay the last payment [in] June 2021,” said the company.

The casino operator had said in a March filing it was awaiting agreement from Mega Bank on settlement on a long-standing dispute with the Thai vendors of Star Vegas, a property in Poipet, on Cambodia’s border with Thailand, a country were casino venues are not permitted.

In a June filing, Donaco had stated Mega Bank had “agreed to the deferral” until December 31, of a US$5-million payment owed to it on the principal of its loan to Donaco.

In early April, a time when Star Vegas – and Donaco’s other Asian casino hotel, Aristo International, in Lao Cai on Vietnam’s border with China – were both closed as a Covid-19 countermeasure, Donaco said it expected a “cash burn run rate” of between US$800,000 and US$900,000 per month.

Aristo International reopened casino operations in mid-May. Star Vegas began a “limited reopening” from September 25.

On September 1, Donaco said in a filing it had significantly narrowed its fiscal-year loss as of June 30 this year, to just above AUD58.9 million, from AUD198.0 million a year earlier, even though the second half of the reporting period was affected by Covid-19.

On December 18, Donaco said it had returned to positive EBITDA (earnings before interest, taxation, depreciation and amortisation) in October and November.