• Subscribe
  • Magazines
  • About
  • Contact
  • Advertise
Friday 8 August 2025
  • zh-hant 中文
  • ja 日本語
  • en English
IAG
Advertisement
  • Newsfeed
  • Mag Articles
  • Video
  • Opinion
  • Tags
  • Regional
    • Africa
    • Australia
    • Cambodia
    • China
    • CNMI
    • Europe
    • Hong Kong
    • India
    • Japan
    • Laos
    • Latin America
    • Malaysia
    • Macau
    • Nepal
    • New Zealand
    • North America
    • North Korea
    • Philippines
    • Russia
    • Singapore
    • South Korea
    • Sri Lanka
    • Thailand
    • UAE
    • Vietnam
  • Events
  • Contributors
  • SUBSCRIBE FREE
  • 中文
  • 日本語
No Result
View All Result
IAG
  • Newsfeed
  • Mag Articles
  • Video
  • Opinion
  • Tags
  • Regional
    • Africa
    • Australia
    • Cambodia
    • China
    • CNMI
    • Europe
    • Hong Kong
    • India
    • Japan
    • Laos
    • Latin America
    • Malaysia
    • Macau
    • Nepal
    • New Zealand
    • North America
    • North Korea
    • Philippines
    • Russia
    • Singapore
    • South Korea
    • Sri Lanka
    • Thailand
    • UAE
    • Vietnam
  • Events
  • Contributors
  • SUBSCRIBE FREE
  • 中文
  • 日本語
No Result
View All Result
IAG
No Result
View All Result

Deconstructing Donaco

Muhammad Cohen by Muhammad Cohen
Fri 10 May 2019 at 02:40
Deconstructing  Donaco
80
SHARES
2k
VIEWS
Print Friendly, PDF & Email

Australia-listed Donaco has falling revenue, no CEO, a multinational legal dispute with a major shareholder, a new largest shareholder that wants out, a gutted share price and a pair of unmatched frontier market border casinos. Otherwise, it’s doing great.

Donaco’s Aristo International Hotel in Vietnam

Donaco International’s falling out with the Thai politician who sold it Star Vegas has halved property EBITDA while entangling Donaco in legal proceedings in four jurisdictions, prompting a “strategic review” of the company’s future.

Amid the tumult, Managing Director/CEO Joey Lim took a leave of absence then was “terminated” and forfeited his equity to a secured lending specialist, now Donaco’s biggest holder of shares languishing below AU$0.10 (US$0.07) after trading above AU$0.60 when it bought Star Vegas.

Here’s a recap of how Donaco, which also owns Aristo International on Vietnam’s border with China’s Yunnan Province, got here and where it may go.

In 2015, Donaco made its self-proclaimed “transformational” acquisition of Star Vegas in Poipet, the Cambodian casino cluster closest to Bangkok, just over three hours drive away. Somboon Sukjaroenkraisri sold Star Vegas for US$360 million, including 148 million Donaco shares, 18% of the company, then valued at US$120 million.

“We structured that deal with one-third of the price in shares to align his interests with other shareholders,” Donaco Executive Director Ben Reichel says.

Reichel rejects as “lazy” criticism that Donaco never should have bought Star Vegas due to Cambodia’s legal and regulatory status.  Former Australian gaming regulator Peter Cohen of The Agenda Group says, “I don’t believe that the lack of regulatory control is in itself problematic, but any Australian-listed company has obligations to comply with AML and anti-corruption rules wherever they operate.”

Donaco hasn’t faltered on those fronts.

HIGH MARGIN

Donaco gave Somboon a two year contract to manage Star Vegas through 30 June 2017. He guaranteed US$60 million annual property EBITDA, met the targets – posting margins of better than 60% – and earned management fees equivalent to roughly one-third of EBITDA. Experts call the fee rich but not outrageous.

Those two years weren’t all smooth sailing, though. Donaco’s stock price fell following the acquisition and US$55 million Aristo’s rollout into China-Vietnam tensions and President Xi Jinping’s corruption crackdown. Thailand’s king passed away in October 2016 and mourning decreased Poipet revenue.

Donaco International’s Executive Director, Group General Counsel and Company Secretary, Ben Reichel

Somboon’s Star Paradise hotel, across the street from Star Vegas, added gaming areas in 2016. Donaco says it wanted Star Paradise gaming to accommodate new junkets, although Star Vegas had ample space for gaming expansion. Others say Somboon wanted his own casino again.

What’s clear is that Somboon has a non-compete clause barring him from opening casinos in Poipet, and that Donaco managed the Star Paradise facility for a US$150,000 monthly fee. In a March 2017 interview with Inside Asian Gaming, Joey Lim said Donaco hoped to extend Somboon’s Star Vegas management contract and, in case Thailand legalized casino gambling – Poipet’s nightmare – Donaco would rely on Somboon’s Thai connections to seek a license.

BIG ASK

Three months later, though, Somboon’s Star Vegas management contract expired unrenewed.

“When we negotiated to extend, his ask was too much and [Donaco] decided to manage it thereafter,” Lim recalls. Attempts to contact Somboon were unsuccessful.

Donaco was removed from Star Paradise but casino operations continued, and Star Vegas mainstay junkets relocated there. Star Vegas FY17/18 VIP turnover decreased 52%, gaming revenue fell 40%, EBITDA dove 52% and Donaco wrote down Star Vegas’ license value by AU$143.9 million. In the first half of FY18/19, revenue stabilized but EBITDA fell 29% to AU$13.2 million, and Donaco wrote down another AU$38.2 million of license value.

Donaco has tried to rebuild the business by recruiting new junkets from Thailand and beyond, upgrading facilities and initiating online gaming, with spotty results. It’s obtained injunctions against Star Paradise, subsequently renamed Winsor, and Star Paramax, a casino up the road behind a supermarket. Both continue to operate and a larger casino is under construction.

A hearing is scheduled for June in Singapore on Donaco’s US$190 million arbitration claim against Somboon. In Australia, Donaco has frozen Somboon’s 148 million shares and withheld payment of a AU$19 million management fee. Asked about the effectiveness of legal actions, Reichel says, “Our job is to achieve the best result for our shareholders.”

Somboon is suing Donaco in Thailand for defamation and in Cambodia to overturn Donaco’s lease on the Star Vegas land, which he still owns. He reportedly hasn’t cashed Donaco lease payment checks to bolster his claim.

WILD CARD LENDER

The wild card is Orchard Capital Partners (OCP) Asia. Lim defaulted on a loan, giving OCP Asia his 27.25% Donaco stake. OCP Asia bought an additional 9.35%. Lim, who remains on Donaco’s board, has appealed to Australia’s Takeovers Panel to stop the market purchase.

Now Donaco’s largest shareholder, OCP Asia did not respond to requests for comment. It has lodged the former Lim holding with a custodian, suggesting it wants a quick sale, and taken no role in Donaco operations, sources say, including the 10 April appointment of former Australian gaming regulator David Green to Donaco’s board.

RelatedPosts

Vietnam gaming

Vietnam to introduce casino entry fee in place of financial capacity requirement under revamped pilot program for locals

Tue 5 Aug 2025 at 19:02
Editorial – Better late than never

Editorial – Better late than never

Thu 31 Jul 2025 at 07:13
Angel’s Yasushi Shigeta

Angel’s Yasushi Shigeta

Thu 31 Jul 2025 at 07:08
The Magic Number

The Magic Number

Thu 31 Jul 2025 at 06:41
Load More

Separately, Donaco will soon complete its strategic review that could recommend a breakup.

“In the Board’s view, the current share price is in no way reflective of the value of the company’s assets,” Donaco’s December review announcement states.

Global Market Advisors Senior Partner Andrew Klebanow calls Star Vegas and Aristo “distinct properties with completely different business models. While there are some companies that can manage diverse assets in distinctly unique markets, most cannot. In this case, there is probably greater value in selling each individual asset than combined.”

Even in bad times Star Vegas produces three times the gaming revenue and EBITDA of Aristo.

“Star Vegas is still number one in Poipet and a great property,” Fortuna Investments Director Tim Shepherd, a co-founder of Australia-listed frontier market casino operator Silver Heritage Group, says.

Notwithstanding increasingly possible Thai casino legalization, Poipet has room to grow, with a rail link near completion and an airport in development. Star Vegas could attract interest from Macau junkets or other Poipet operators, notably Somboon.

Payback

Co-founder Joey Lim lost his shares through a loan to help Donaco acquire Star Vegas

Joey Lim founded Donaco (ASX ticker DNA) in 2002 with his late grandfather, Genting Group patriarch Lim Goh Tong. As Managing Director and CEO, Lim spearheaded Donaco’s expansion in Lao Cai, Vietnam, and acquisition of Star Vegas in Poipet. In December Lim took temporary leave “to deal with medical and personal matters,” Donaco told ASX. In March, Donaco “terminated” Lim without explanation, though he remains a board member.

Lim shares perspectives on Donaco with Inside Asian Gaming Editor at Large Muhammad Cohen in edited excerpts below. Not discussed were Lim’s ouster and lawsuits over his father’s estate against his uncle Lim Kok Thay, Genting’s chairman.

Muhammad Cohen: Why did you take a loan from OCP Asia? Why wasn’t it paid back?
Joey Lim: The OCP transaction was first conducted back in 2015. OCP granted a facility to me and my family to subscribe to the DNA rights issue raising money for the US$360 million acquisition of Star Vegas.
In 2015 the pledge of shares was only one-third of the total holdings at AU$0.60. Over time, with the legal action against the Thai vendors as well as the competition from the same vendors, the DNA share price suffered and further collateral in the form of shares needed to be pledged, leading to the total of my holdings being pledged in early 2018.
I had been servicing the principal and interest payments in a timely manner up until late 2018 when my divorce proceedings hit me hard financially. I was unable to make one payment in November 2018 for the sum of circa US$440,000.

MC: Did Donaco know Star Vegas seller Somboon Sukjaroenkraisri was building a casino across the street? Did the non-compete agreement cover that?
JL: We were unaware of Somboon’s developments on his land outside of what he had sold to the company in 2015.
The non-compete clause in the management contract signed with Somboon covers non-compete by him, his family members and his lands for the whole of Poipet for perpetuity. It even restricts him from leasing land to third parties for casino operations. The contracts were all signed under Singapore law as a jurisdiction, and so proceedings and enforcement will be effected in Singapore.
There are several legal proceedings in Cambodia as well and I believe updates have been given to the public. Given the size of the investment by DNA and the multinational nature of the company, we have full faith in the legal system of both countries.

MC: Some sources say conflicts became personal between you and Somboon. Is a settlement more possible with you on the sidelines?
JL: Rest assured that proceedings are carried out in the utmost professional manner, and there are no personal vendettas by the company, its board nor staff against Somboon.
A settlement is not out of the picture. It is just a matter of how far Somboon is willing to make remedies to the company on its complaints

MC: Should Donaco sell Star Vegas?
JL: As you can see from our latest filings, even during adverse business conditions, DNA Star Vegas continues to be profitable. I believe it is in all shareholders’ best interests to see out a resolution with Somboon either in or out of court, then we can focus on growing and managing the property with full purpose. There is a lot of potential in Poipet yet to be realized, with a new train terminal under construction and airport slated for 2020. Capacity to the city will increase.

MC: Is there synergy between Aristo and Star Vegas?
JL: There is no current synergy between Aristo and Star Vegas and that is the business model of DNA, seeking independent captive regional properties.

Share32Share6
Muhammad Cohen

Muhammad Cohen

Muhammad Cohen was formerly Editor at Large of Inside Asian Gaming and wrote Hong Kong On Air, a novel set during the 1997 handover about TV news, love, betrayal, high finance and cheap lingerie.

Current Issue

Editorial – Better late than never

Editorial – Better late than never

by Ben Blaschke
Thu 31 Jul 2025 at 07:13

Inside Asian Gaming has in recent weeks been hearing increasing chatter around a possible move by Vietnamese authorities to introduce...

Angel’s Yasushi Shigeta

Angel’s Yasushi Shigeta

by Ben Blaschke
Thu 31 Jul 2025 at 07:08

Yasushi Shigeta, Chairman and owner of one of the world’s largest gaming industry suppliers, Angel Group, sits down with Inside...

The Magic Number

The Magic Number

by David Bonnet
Thu 31 Jul 2025 at 06:41

In this in-depth deep dive into the evolution of the Asian gaming landscape, David Bonnet argues that many regional jurisdictions...

Rashid Suliman – A road well traveled

Rashid Suliman – A road well traveled

by Ben Blaschke
Thu 31 Jul 2025 at 02:45

Rashid Suliman, Vice President of Global Gaming Asia-Pacific for casino solutions provider TransAct Technologies, provides some insight into his unique...

Evolution Asia
Your browser does not support HTML5 video.
Aristocrat
GLI
Nustar
SABA
Mindslot
Solaire
Hann
Tecnet
HKUST
NWR

Related Posts

Angel’s Yasushi Shigeta

Angel’s Yasushi Shigeta

by Ben Blaschke
Thu 31 Jul 2025 at 07:08

Yasushi Shigeta, Chairman and owner of one of the world’s largest gaming industry suppliers, Angel Group, sits down with Inside Asian Gaming to discuss the company’s evolution into a true industry titan during his 30-year tenure. He recounts how Angel...

Macau’s IP Economy

Macau’s IP Economy

by Pierce Chan
Thu 31 Jul 2025 at 02:01

As Generation Z – those born between 1995 and 2010 – gradually becomes the main force in consumption, the IP economy has risen rapidly in mainland China. The Macau government is also seizing on this trend, introducing a series of...

Keeping it local

Keeping it local

by Newsdesk
Thu 31 Jul 2025 at 01:48

Melco’s House of Dancing Water provides the company a unique opportunity to help develop and nurture local talent while enabling that talent to learn from the world’s best. Melco Resorts & Entertainment’s reimagined House of Dancing Water debuted at City...

7 Deadly Sins

7 Deadly Sins

by Newsdesk
Thu 31 Jul 2025 at 00:28

Global betting company 1xBet threw a memorable party in Manila in June, featuring as brand ambassador none other than world-renowned actress and model Eva Elfie. On 3 June, global betting company 1xBet hosted a private interactive event for its top...

Your browser does not support the video tag.


IAG

© 2005-2025
Inside Asian Gaming.
All rights reserved.

  • SUBSCRIBE FREE
  • NEWSFEED
  • MAG ARTICLES
  • VIDEO
  • OPINION
  • TAGS
  • REGIONAL
  • EVENTS
  • CONSULTING
  • CONTRIBUTORS
  • MAGAZINES
  • ABOUT
  • CONTACT
  • ADVERTISE
  • 中文
  • 日本語

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist

No Result
View All Result
  • 中文
  • 日本語
  • Subscribe
  • Newsfeed
  • Mag Articles
  • Video
  • Opinion
  • Tags
  • Regional
  • Events
  • Contributors
  • Magazines
  • Advertise
  • Contact
  • About
  • Home for G2E Asia

© 2005-2025
Inside Asian Gaming.
All rights reserved.

  • 中文
  • English
  • 日本語