Australia-listed casino operator Donaco International Ltd says it plans to raise AUD14.4 million (US$9.99 million) in fresh capital to strengthen the company’s balance sheet and to be used as immediate working capital. The firm said the exercise was due to the “urgent need of capital” because of the impact from Covid-19 on its operations, according to a Friday filing.
Donaco runs casino hotel properties in Indochina: Star Vegas Resort and Club (pictured in file photo) at Poipet on Cambodia’s border with Thailand; and Aristo International Hotel and its associated casino at Lao Cai on Vietnam’s border with China.
The company confirmed that the group’s business continues to be impacted by Covid-19-related travel restrictions, which had led to the temporary shutdown of its two properties. Only the scheme in Vietnam has meanwhile resumed operations, albeit at limited capacity.
The capital raising exercise was being undertaken “by way of fully underwritten pro rata non-renounceable entitlement offer” on the basis of one new share for every two existing shares held by eligible holders. The offer is to be conducted at an issue price of AUD$0.035 per new share, said Donaco.
The offer is fully underwritten by 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.
Via the offer or the underwriting commitments, the underwriters might increase their holding in Donaco to an aggregate amount of nearly 45.33 percent of all shares on issue on completion of the exercise. The offer is scheduled to close on July 23.
In Friday’s filing, Donaco said its directors had determined that the company was “in urgent need of capital as a result of the impact of Covid-19” on the group’s gaming operations and the requirement to make repayments to its principal lender, Mega International Commercial Bank Co Ltd. Donaco said last month that Mega Bank had agreed to a six-month deferral of a US$5-million payment which had been due on June 15.
Donaco’s non-executive chairman Mel Ashton said the new funding aligned with the company’s “key objectives of limiting debt, preserving shareholder value and providing immediate financial stability”.
“Covid-19 travel restrictions, the consequent closing of international borders, and the closure of casinos in Vietnam and Cambodia (with the casino in Vietnam now partially operational), has significantly impacted the financial position of the company,” said Mr Ashton, as quoted in the filing.
“This capital injection will enable us to stabilise our immediate financial needs, and meet the upcoming repayment requirements on our borrowings,” he added. “The implementation of our proactive cost reduction strategy and the additional equity from the capital raising will help stabilise the company’s balance sheet at a critical time.”
Subject to completion of the entitlement offer, Donaco said it would appoint Mr Lee Bug Huy and Paul Porntat Amatavivadhana as non-executive directors of the company.
Mr Ashton and Simon Vertullo, also a non-executive director, are to retire from Donaco’s board at the completion of the exercise, added the firm.
Apr 15, 2021Macau’s economy is projected to “rebound by 53 percent” this year, assuming a recovery in gross gaming revenue (GGR) “to about half” of pre- Covid-19 levels, said Fitch...
Apr 15, 2021
Apr 15, 2021
”We ... model that VIP GGR [in Macau] can ultimately only recover to about half of pre- Covid-19 levels, despite opening of multiple high-end properties”
DS Kim, Derek Choi, and Livy Lyu
Analysts at JP Morgan