Donaco International Ltd says payments linked to settlement of a long-running dispute with people that sold the firm Star Vegas Resort and Club (pictured), a Cambodia casino complex, are to be deferred pending approval by a key lender to Donaco, Taiwan’s Mega International Commercial Bank Co Ltd.
Mel Ashton, chairman of Donaco, a boutique Australia-listed operator of casinos in Indochina, said in a Friday filing: “We are pleased to have reached a variation with DNA Star Vegas Co and Donaco Hong Kong [Ltd] that provides more certainty around settlement while we continue to pursue the required consents from Mega Bank.”
He added: “Settlement payments will be withheld until consent from Mega Bank is received and will subsequently be offset at such time.”
He further stated: “We are also pleased that the parties agreed to also defer the additional lease payment of US$20 million as a part of the settlement variation. We thank the parties for their cooperation. The economic interests of all the parties are aligned and these actions remove uncertainty around the settlement and lease as we work to finalise bank consent.”
According to previous Donaco filings, the company acquired Star Vegas in Poipet – on Cambodia’s border with Thailand – from Thai vendors in July 2015 for a total consideration of US$360 million.
On March 2 the Donaco listed entity had told the Australian Securities Exchange that it agreed to remove non-competition and non-solicitation clauses regarding its Star Vegas Resort and Club business in Poipet – from a 2015 contract it signed with the Thai vendors of Star Vegas – as part of a deal to end multiple court cases and arbitration disputes with them.
In return Donaco is due to get US$38 million from those parties, and in return provide an additional lease payment of US$20 million to an entity linked to the vendors.
In late March Donaco said it was in the process of seeking agreement from Mega Bank regarding the agreement.
Since then the Covid-19 pandemic has led to the temporary closure – with effect from April 1 – of Cambodia’s casinos.
Donaco also runs the Aristo International Hotel and associated casino in Vietnam near that nation’s border with China. Gaming business there has also been paused due to the Covid-19 crisis.
On April 7, Donaco said in a filing the two shutdowns – were they to be extended significantly beyond an initial two-week period – were likely to cost it up to US$900,000 per month in “cash burn”.
