Donaco to seek financing as Vietnam border casino Aristo feels virus impact - IAG
Thursday 27th February 2020
Southeast Asian casino operator Donaco International Ltd says it may need to seek financing to meet its payment obligations as border restrictions between China and Vietnam aimed at controlling spread of the Coronavirus threaten the performance of its Vietnamese casino Aristo.
The warning, issued alongside the company's 1H20 results announcement early Friday morning, comes after Donaco recently revealed a 75% decline in visitation through February as a result of the border controls.
Providing an update on the situation today, recently appointed Chairman Mel Ashton said, "The Board is aware that the liquidity of the Company may tighten from the closure of the border crossing between China and Vietnam in January due to the outbreak of COVID-19.
"Accordingly, Donaco is seeking to access financing to support payment obligations and working capital requirements of the Company."
Ashton said that accessing capital was one of three key short-term priorities for the company, which has undergone a major overhaul of its boardroom since previous management was voted out at a dramatic shareholder meeting in November. Those priorities include the settlement of ongoing litigation against the Thai Vendor of Star Vegas in Poipet, Cambodia, and a tightening of operational and corporate expenses "to improve efficiencies across the business and also to bring the conditions around contracts with third party vendors on to more commercial terms."
Ironically, the situation in Vietnam comes as Aristo led somewhat of a recovery for Donaco in the six months to 31 December 2019, with a narrowed loss of AU$1.5 million including a 7% increase in EBITDA to AU$13.8 million. Aristo's results saw a 42% increase in net gaming revenue to RMB27.0 million.
Conversely, Star Vegas reported an 18% decline in net gaming revenue to THB 531.5 million, with EBITDA down 19% to THB255.5 million.
Commenting specifically on Star Vegas, Donaco CEO Paul Arbuckle said,"Our results were impacted by increased competition in the Poipet area and the transitioning work we have undertaken to standardize junket contracts. We did benefit from a strong win rate in relation to the VIP play which assisted the results.
"We have introduced new gaming machines on more favorable terms from the machine providers, and these have shown an improved performance in our gaming machine revenues during January.
"We maintained tight control of our operating expenses, which reduced by 9% compared to the previous corresponding period.
"We are assessing the impact of COVID-19on the DNA Star Vegas business, and are therefore adopting a cautious approach in the short term. We will continue to tightly manage our expenses over the next few months."