Australia-listed Donaco International Ltd is to spin off iSentric Sdn Bhd, its mobile technology unit, to focus on “operating and investing in leisure and entertainment businesses in the Asia Pacific,” the company said in a filing. The company currently operates the Aristo International casino hotel (pictured) in Vietnam.
Donaco is selling 100 percent of its interest in iSentric to OMI Holdings Ltd for the issue of AUD12 million (US$11.3 million) of ordinary shares in OMI. Donaco said it expects to hold about 78.2 percent of OMI on completion of the deal. The latter is to change its name to iSentric Ltd once the deal is completed.
OMI has been focused on research, development and manufacture of medical products. Malaysia-based iSentric, acquired by Donaco in June 2013, serves customers in the financial services sector and telecommunication providers.
Under the distribution deal, Donaco shareholders will receive about 0.13 shares in iSentric for every Donaco share held. The iSentric shares will be valued at 20 cents of Australian dollar each, the company said in the filing to the Australian Securities Exchange (ASX).
Those Donaco shareholders that under the deal would receive fewer than AUD500 worth of iSentric shares and those shareholders that do not want OMI shares will see their entitlements pooled together and sold via a share sale facility. The cash proceeds of the sale, less costs, will be remitted to shareholders, the casino operator said.
The company described the proposed ‘in specie’ distribution as “an equitable way to distribute value in iSentric to its shareholders”.
iSentrict operating as a standalone listed public company is expected to generate more value for Donaco shareholders, said the filing. “Similar mobile technology and software businesses listed on the ASX have received good support from investors,” the company stated.
Donaco has scheduled an extraordinary general meeting for August 25. It expects the completion of the iSentric sale to take place on September 5.
Donaco, meanwhile, announced an “on-market buy-back” of 37.2 million shares, which represents 8 percent of the total issued share capital. The buy-back is expected to begin on August 6 and to be open for 12 months, the company said in a separate filing.
“The company has a substantial amount of cash on our balance sheet, with negligible debt, and more cash from operations constantly being added. This balance sheet strength gives us considerable firepower to pursue a strong pipeline of acquisition and investment opportunities, which we are actively working on,” Joey Lim Keong Yew, Donaco’s chief executive, said in the statement.
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia