Donaco International weighing up takeover by On Nut Road
Argyle Street Management has made a bid to buy Vietnam and Cambodia casino operator Donaco International, through a company called On Nut Road.
On Nut Road already owns 12.84 per cent of Donaco, would pay US$35.2m for the company who owns Star Vegas in Poipet, Cambodia and Aristo International in Vietnam.
Donaco’s Non-Executive Chairman, Porntat Amatavivadhana, said: “We have carefully considered the merits of the scheme and we believe ONR’s offer provides compelling value to Donaco shareholders, representing a 54.1 per cent premium to the 90-day volume weighted average share price.
“The Board believes that the scheme is in the best interest of shareholders, providing certainty in the form of a cash payment to shareholders while removing the risks associated with the cyclical nature of our business.
“While Donaco has performed steadily in the last few years and has emerged from the pandemic, the company’s financial headwinds have been compounded over the years due to limited profit margins and a lack of substantial Investor confidence. This has made fundraising efforts for any form of growth particularly challenging. The dependence on a single, major shareholder for financial stability becomes even more critical in light of the economic strains brought about by the pandemic.
“Moreover, the new gaming legislation in Thailand to introduce casino franchises in Bangkok could significantly impact the flow of patrons to Donaco’s border casinos. In addition, the impact on costs due to recent actions to cut power along certain towns between Thailand and Cambodia, resulting in intermittent power supply, further complicates our operational conditions.
“Considering the prevailing border issues and uncertain electricity supply, this may present a unique opportunity for Donaco shareholders that may not arise again. Given these factors, it is imperative for Donaco shareholders to look closely at the offer.
“Therefore, the Board believes that the Scheme provides shareholders with a compelling opportunity to de-risk their investment and realize certain value at an attractive premium to historical trading levels leading into this announcement.”
Editor’s note: a correction was made to this article, removing that ‘Argyle Street Management is owned by Thai billionaire Chanin Donavanik.’ Mr Donavanik is listed as a director of certain ASM funds
