Donaco International Ltd., a major investor in casinos, particularly in Southeast Asia, continues to suffer due to ongoing litigation. The six-month period ending December 31, 2018, saw the company forced to report a net loss of AU$36.8 million (US$26.09 million), mostly due to a major impairment charge against its gaming license for the Star Vegas resort in Cambodia.
An impairment in the amount of US$27.08 million came as the company continues to fight with a Thai vendor and former business partner. It previously won a court case that prevented its partners from terminating the land lease of the Star Vegas, but the litigious drama is far from over.
That former partner, Lee Hoe Property, has been running illegal casinos next to Star Vegas in violation of non-compete agreements. The two companies, Donaco and Lee Hoe, have been involved in court proceedings in Cambodia and Singapore, as well as Australia. Donaco has sought restitution of damages worth $190 million in Singapore and has asked an Australian court to freeze the Thai vendor’s shares.
Donaco saw its group revenue drop 9.6% on its gaming floors during the period due to a lower VIP win rate, as well as supposed organized crime activity perpetrated by a Chinese crime syndicate along the border between China and Vietnam. Donaco operates a casino, the Aristo, on the Vietnam-China border. Group revenue was reported as AU$39.7 million (US$28.149 million).
Aristo revenue for its VIP and Premium operations dropped a combined 79%. VIP turnover fell from US$1.028 billion to US$178.92 million year-on-year and the venue’s EBITDA (earnings before interest, tax, depreciation and amortization) plummeted 59% to US$2.012 million during the period.
Across all of Donaco’s operations, EBITDA dropped to US$9.148 million for the period, compared to US$13.75 million a year earlier.
Despite the decreases, Donaco has stated that it has already been able to turn things around. After recently adding new junkets, its rolling chip VIP turnover for Star Vegas improved 103% and daily average visitation has increased 30.7%. It adds that its financial position “remains solid,” and that it has positive operating cash flow of US$1.773 million. The company also paid of part of a loan worth US$31 million it has with Mega Bank, giving the financial institution US$8.55 million this month.