Donaco releases first quarter figures

by Mia Chapman Last Updated
Donaco doesn?t plan to sell properties despite financial challenges 

Australian casino operator Donaco International says its first quarter revenue has fallen 58.7 per cent year-on-year due to three months being “significantly impacted” by coronavirus and regional travel restrictions.

GGR Asia reports that revenue for the quarter ending March 31 was A$10.53 million, compared to $25.50 million in the first quarter of 2019.

The company recorded negative earnings before interest, taxation, depreciation and amortisation of A$1.13 million for the March quarter.

This compares to a positive EBITDA of A$10.82 million a year earlier.

Donaco’s flagship venue is the Star Vegas Resort and Club near the Cambodian border with Thailand.

Its Aristo International Hotel and associated casino are in Vietnam, near the border with China.

The firms operations in both properties have been suspended since April 1 due to coronavirus.

In its latest filing, Donaco said the Star Vegas property recorded revenue of A$.837 million and $500,000 EBITDA.

This is down 60.4 per cent and 93.5 per cent respectively from the same period a year ago.

The Aristo complex had revenue of A$2.6 million and EBIDTA of A$500,000, a year-on-year decline of 60 per cent and 87 per cent respectively.

The company said it had a negative cash flow from operations of A$5.1 million and that the group’s net debt increased from A$50.9 million to A$60.8 million in year-on-year terms.

Donaco said additionally that the closure of its casino operations was having a “material impact” on the group’s business, with the company introducing “measures to reduce costs, including headcount,” in order to preserve liquidity.

The casino operator said that the Aristo property might “reopen in May 2020, depending on a decision from the government of Vietnam.”

In prepared remarks, Donaco’s chairman Mel Ashton said: “This was a tough quarter for Donaco with both of our casinos impacted by Covid-19 with considerably less gaming activity occurring.”

He added: “Now that our casinos are temporarily closed, the preservation of liquidity is a key priority. We will continue to make sure we have adequate measures in place and remain in a healthy financial position for when operations restart.”

As at March 31, 2020, the company’s cash balance was A$18.87 million, according to its latest filing.

The company said previously that it expected a “cash burn run rate” of between US800-900,000 a month during the temporary closure of its two casinos.

In its latest filing, Donaco also confirmed that it was still in discussions with its key lender, Taiwan’s Mega International Commercial Bank, seeking consent for payments linked to settlement of a long-running dispute with people that sold the Star Vegas complex.

Donaco to defer settlement of property dispute

Donaco International says payments linked to a settlement of a long-running dispute with people that sold the firm Star Vegas Resort and Club, a Cambodian casino complex, are to be deferred pending approval by a key lender to Donaco, Taiwan’s Mega International Commercial Bank Co Ltd.

GGR Asia reported in April the chairman of Donaco, Mel Ashton, said in a Friday filing: “We are pleased to have reached a variation with DNA Star Vegas Co and Donaco Hong Kong that provides more certainty around settlement while we continue to pursue the required consents with 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 had 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.

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