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Donaco expecting AU$144 million impairment on Star Vegas casino license

Tuesday, 13 February 2018 19:53
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Australian-listed Donaco International Ltd has estimated an impairment on the casino license of its Star Vegas property in Cambodia of around AU$144 million due to breaches of an agreement with its former vendor.

In a filing to the Australian Securities Exchange ahead of the release of the company’s half year December 2017 financial results, Donaco said it had been informed by its auditors, Crowe Horwath, that there are indicators of impairment applying to its Star Vegas casino license based on the preliminary results of the business for the six months to December 2017.

“The impairment of the Star Vegas business is a direct result of the breaches of agreement by the Thai vendor, Mr Somboon Sukcharoenkraisri, and his two sons, ‘Ham’ Techatut Sukcharoenkraisri and ‘Qoo’ Bhuvasith Chaiarunrojh,” Donaco said.

“The company has commenced litigation against Mr Sukcharoenkraisri and his sons over their breaches of their agreements, which specifically relate to the operation of competing casino and gaming businesses in the Poipet area.”

Donaco announced in December that it had won a preliminary injunction against its former vendor for continuing to run gaming operations in defiance of non-compete provisions.

Under the terms of the non-compete provisions, the vendor is not allowed to be involved in any other casino or gaming business in the Poipet area but had previously been granted permission to host gaming facilities under the management of Donaco in a deal that saw the latter paid a monthly management fee of THB 5 million (US$151,000). That agreement expired last year with no new management arrangements put in place.

Donaco has also commenced arbitration proceedings in Singapore where it is claiming damages of US$120 million.

In more positive news, Donaco announced on Tuesday that it has appointed Gerald Tan as Chief Operating Officer. Tan is currently Vice President of Business Development at Donaco where he spearheads Donaco’s business partnerships and VIP/junket operations at Star Vegas.

“He has played a key role in rebuilding the VIP business over the past six months, following the former vendor’s breaches of his agreements. In this new role, Mr Tan will continue to be based primarily in Poipet, with a focus on driving revenue and earnings from the Star Vegas business,” Donaco said.

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