After spending years fighting a battle with former business associates, Donaco International finally found relief early last month. The dispute centered on the Star Vegas in Cambodia and the associates’ breach of contract, and led to a number of litigious actions over the years. With the two sides finally agreeing to bury the hatchet and settle their differences at a negotiating table, an equitable, but convoluted, agreement was reached. The only remaining step was to have the company’s bank, Mega International Commercial Bank out of Taiwan, sign off on the money portion of the agreement, and Donaco and the former associates have agreed that all payments will be deferred until that approval is given. This essentially wraps up the entire ordeal, allowing both parties to walk away feeling like they won.
According to the terms of the recently-negotiated settlement, Donaco will receive a perpetual lease for the Star Vegas, which will be in place until 2115. It will strip away the non-compete language from the original agreement with the Thai vendors, language that started the whole fiasco, in exchange for $38 million. At the same time, Donaco will offer $18 million in unpaid fees, as well as additional restitution. It will then pay a monthly lease of $20,000 for Star Vegas, an amount that will increase by $10,000 after the fifth year. After the tenth year of operations, the lease will increase by 3% every three years.
The dropping of the non-complete clause will allow the former associates to be able to continue with their competing casino property, Star Paradise. That gambling venue sits next door to Star Vegas and was opened in 2016, a year after Donaco purchased the rights to Star Vegas. Since then, Donaco has had a lot of headaches to treat, including allegations of the company’s founder mismanaging operations and his forced departure, a drop in revenue, upper management shakeups and more.
Partly due to the coronavirus, and partly because a deal of this magnitude requires an extra special microscopic examination, Mega Bank isn’t rushing to agree to the negotiated stipulations. It is performing due diligence to make sure that everything is in order and viable, but Donaco is confident that the financial institution will ultimately agree to the terms. Receiving support from the other side of the table allows Donaco to make sure it’s protecting its assets.
Now that it looks like things are about to actually come to a close, Donaco, which stated last December that it was considering a rebrand the company as Pan Asian Leisure, can move on with its efforts to stabilize and grow. Mel Ashton, the company’s chairman of the board, sent out a message to everyone who helped make the terms of the negotiated agreement possible, stating, “We thank the parties for their cooperation. The economic interests of all parties are aligned and these actions remove uncertainty around the settlement and lease as we work to finalize bank consent.”
