Operator News
Cambodia – Donaco finally reaches settlement with Star Vegas’ former owners
By Phil - 3 March 2020
Donaco International has finally been able to settle the various proceedings in Singapore, Australia, Thailand and Cambodia with the Thai vendors from Donaco’s acquisition of Star Vegas the Poipet casino, located on the border between Thailand and Cambodia.
The former owners include Somboon Sukcharoenkraisri, Lee Bug Tong, Lee Bug Huy, Lee Hoe Property Co. and Paramax Co.
Donaco said its ‘focus in conducting settlement discussions has been to act in the best interest of the company by preserving shareholder value in the Star Vegas business and to provide a certain and stable platform to support the ongoing improvements at Star Vegas, which has remained profitable and generating positive cashflow.’
In reaching the decision the Board had to assess the different potential outcomes arising from the Litigation. Whilst the Singapore arbitration was assessed to have some merit, this had to be balanced against the termination of the Star Vegas lease as a result of the Cambodian arbitration award which would have led to the closure of the Star Vegas business and subsequently a full write off of the remaining carrying value of Star Vegas.
Donaco said: “The settlement reached provides certainty of tenure for the Star Vegas business and will conclude all disputes between the parties. It will also allow the company and management to now focus on the forward momentum of the profitable Star Vegas business, and continued improvements to the company’s balance sheet and financial position ahead of any COVID-19 impacts to second half revenue and earnings.”
Chairman Mel Ashton added: “We have reached a pragmatic and fair settlement of this long running dispute, in what we believe is a timely manner. Most importantly the remaining value of the Star Vegas business is retained for shareholders, and we do not expect any changes to the carrying value of the asset as a result of this settlement. This gives us the stable platform we need to press forward on our other two key priorities for shareholders – firstly continued improvement to the financial position of the company, as demonstrated by our 23 per cent reduction in borrowings at the recent half year result, and looking forward making sure we have in place the necessary facilities to weather the short term impacts of COVID19 in the current half.
“Secondly,” he added, “resolution of the uncertainty around the dispute will allow us much greater leverage in addressing the conditions around contracts with third party vendors which we are seeking to move on to more commercial terms, in line with our focus on operational and corporate expenses, to improve efficiencies across the business.”
