Donaco to raise AU$14.4m in fresh capital in response to COVID-19

By Violeta Prockyte

 

Donaco International is planning to raise AUS$14.4m ($9.99m) to go towards immediate working capital and will be used to strengthen its balance sheet.

 

The Australia casino operator stated the urgent need for capital is due to the impact COVID-19 has had on the market, mainly associated with travel restrictions. 

 

Donaco runs several venues in Asia, such as Star Vegas Resort in and Club in Cambodia and Lao Cai casino (with Aristo International Hotel) in Vietnam, which had to be temporarily shut down. 

 

The group is planning to raise the capital by basing it on “fully underwritten pro rata non-renounceable entitlement offer”. Eligible holders will be able to acquire one new share for every two existing shares they hold. The issue price for these new shares is AU$0.035. 

 

This new plan to increase capital was underwritten by Lee Bug Huy and Lee Bug Tong, who hold an 18% stake in the group. It’s possible the underwriters could increase their stake in Donaco to 45%. The offer will expire on 23 July. 

 

Mel Ashton, Donaco’s non-executive chairman, said the raised capital would be used for the group’s “key objectives of limiting debt, preserving shareholder value and providing immediate financial stability.

 

Ashton added: “This capital injection will enable us to stabilise our immediate financial needs, and meet the upcoming repayment requirements on our borrowings”, stating the new capital will be paired with cost reduction strategies and additional equity to stabilise the company’s financial situation. 

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