Inside Asian Gaming

IAG JAPAN MAY 2019 42 IN FOCUS Donaco has tried to rebuild the business by recruiting new junkets from Thailand and beyond, upgrading facilities and initiating online gaming, with spotty results. ドナコはタイ内外からの新しいジャンケット の採用、施設のアップグレードそしてオンライ ンゲーミングの開始によって事業の立て直し を図ったが、業績は安定しなかった。 Donaco’s Aristo International Hotel in Vietnam ベトナムにあるドナコのアリスト・インターナショナル・ホテル D onaco 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