GGRAsia – Donaco confirms US$10mln capital via entitlement offer

Donaco confirms US$10mln capital via entitlement offer

Jul 27, 2020 Newsdesk Latest News, Rest of Asia, Top of the deck

Australia-listed casino operator Donaco International Ltd says it has successfully completed a share exercise it flagged earlier this month, and is raising AUD14.4 million – about US$10.3 million at current exchange rates – before costs.

The proceeds of the exercise, known as an entitlement offer, “will be used to meet the upcoming repayment requirements” under a debt facility with Mega International Commercial Bank Co Ltd, also known as Mega Bank.

Some of the funds harnessed will separately be used as “working capital” in relation to two casino complexes that Donaco runs: Star Vegas Resort and Club, in Poipet, on Cambodia’s border with Thailand; and Aristo International Hotel at Lao Cai, on Vietnam’s border with China.

“The funds raised will enable Donaco to continue to service its debt obligations as well as and provide financial stability to the company,” said Donaco in a Monday filing to the Australian Securities Exchange.

The company added that the Covid-19 pandemic and, in particular, consequent restrictions on international travel, had “significantly impacted the level of patronage” at its casinos.

The Cambodian government had mandated the closure of all casinos in that nation from 1 April, but in early July flagged a reopening phase, provided safeguards were followed. The Vietnam government had ordered closure of casinos in that country, amid the threat of Covid-19.

Only the scheme in Vietnam has meanwhile resumed operations, albeit at limited capacity. GGRAsia has contacted Donaco asking for clarification on whether its casino operations in Cambodia were open again for business.

Donaco had previously disclosed that Mega Bank had agreed to defer from June 2020 to December 2020 certain repayments under a debt facility.

The offer is fully underwritten by two people: Lee Bug Huy and Lee Bug Tong; who currently control a 17.99-percent stake in Donaco, said the casino operator. The two investors had been in previous litigation with the Donaco group.

After completion of the entitlement offer and associated underwriting, those two individuals in their role as underwriters will increase their relevant interest in the company to 42.12 percent.

Mel Ashton, Donaco chairman, was cited in Monday’s filing as saying: “We are pleased to advise that the funds raised through the offer will work to ensure that the business remains in a healthy position during the unprecedented Covid-19 pandemic.”