Australia-listed Asian casino operator Donaco International Ltd announced on Monday the implementation of an “on-market buy-back” for up to 41.5 million shares, to a maximum of 5 percent of its ordinary issued shares.
According to the firm’s filing, the share buy-back exercise is expected to begin on or after October 30, and will run for up to 12 months. At the opening of business on the Australian Securities Exchange on Monday, Donaco’s share price stood at AUD0.425 (US$0.335) per unit.
The actual number of shares to be purchased by Donaco under the exercise will depend on “market conditions and volumes”, the filing noted.
“Our primary focus in assessing all potential uses of the company’s cash holdings is to ensure a strong return for shareholders. Buying the company’s shares at recent prices represents an excellent opportunity to generate strong returns,” managing director and chief executive of Donaco, Joey Lim Keong Yew, was cited as stating in the Monday release.
“At current share prices, the buy-back will be earnings-per-share accretive, and will have no impact on current operating businesses. It is also consistent with our strategy of maintaining an efficient capital structure,” Mr Lim stated.
Under the terms of a debt agreement with Taiwan’s Mega International Commercial Bank Co Ltd – refinanced in August this year – Donaco’s dividends and buy-backs combined cannot exceed 30 percent of its net profit after tax for the 12 months to June 30, the firm noted in its Monday filing.
For the 12 months to June 30, Donaco reported net profit after tax down nearly 60 percent year-on-year, at AUD31.0 million in the 12 months to June 30, 2017, according to an August 29 statement. At the time, the firm had announced that it was issuing a dividend for the period amounting to AUD0.05 per share and payable on October 20. That dividend is for an aggregate of just under AUD4.16 million, said Donaco’s Monday release.
“Accordingly, the maximum amount that can be spent on the buy-back exercise at present is AUD5,141,032,” stated the firm.
In late September the company had said that “family” of Donaco’s Mr Lim had sold a total of 37.5 million shares in the firm, for an aggregate consideration of AUD15 million.
Donaco currently makes most of its gaming revenue by making use of Southeast Asia’s patchwork approach to casino legalisation. Its Vietnam venue Aristo International Hotel in Lao Cai, on Vietnam’s northern border with China, currently draws many players from the latter nation, where casino gambling is illegal except in Macau, a Chinese special administrative region.
Donaco’s main Cambodian venue, Star Vegas Resort and Club, at Poipet, draws many customers from neighbouring Thailand, where casinos are also banned. In both Vietnam and Cambodia, locals are currently barred from casino gambling.
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Chief operating officer of Reed Exhibitions Greater China, one of the organisers of the G2E Asia trade show and conference