Donaco to conduct ‘strategic review’ of debt, cash flow

Australia-listed Donaco International Limited announced that it was planning a “strategic review” of its debt and cash flow situation.

In its filing, the operator of Star Vegas in Poipet, Cambodia specifically mentioned its need to “eliminate or restructure” its debt to Mega Bank, currently amounting to $39.9 million. The debt “is secured only against the assets of the Star Vegas business, not the Aristo business,” it noted, referring also to its casino in northern Vietnam.

“Discussions are currently being held with several parties who have put forward proposals to unlock the value of the Company’s assets, and provide value to shareholders,” the filing read. Such proposals, it added, were being reviewed with the assistance of “potential strategic advisors.”

The company gave a timeframe of about three months for the review.

Since the last week of November, Donaco share prices have fallen from about AUD0.18 ($0.13) a share to AUD0.07 ($0.05). The company’s board had taken note of the stock’s trading performance, maintaining that “the current share price is in no way reflective of the value of the Company’s assets.”

For its fiscal year 2018, ended June 30, the company reported underlying net profit after tax of AUD18.3 million ($13.3 million), down from AUD54.6 million ($39.6 million) during the previous year.

Reported loss after tax for FY2018 was AUD124.5 million ($90.2 million), compared to FY2017’s profit of AUD31 million ($22.5 million).

Borrowings amounted to AUD70.4 million ($51 million), lower than last year’s AUD108.4 million ($78.6 million). Its net debt to equity ratio for the fiscal year was 6.3%, lower than FY2017’s 8.7%.

Revenue was AUD92.6 million ($67.1 million), down 32% from FY2017, mainly due to events in Star Vegas, which Donaco said “was significantly affected by the breach of contract by the vendor as well as subdued spending due to weak demand in Thailand.”

Donaco continues to fight for control of the Star Paradise, now known as Winsor, which is adjacent to Star Vegas, and sitting on land owned by the company.

During its annual general meeting last November 29, Donaco issued a trading update that FY2019 was off to a “soft start,” but that it was making some deals to increase online revenue.

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