Donaco International has been making strides to getting back on course, and the Australian-listed casino operator has come a long way. It almost had one foot on solid ground before the coronavirus tripped it up, sending it sliding back down the slope a few feet. Donaco stated in February that it might need a hand to cover the lost ground, and has now found a little bit of help. In a filing with the Australian Securities Exchange from yesterday, the company announced that its primary lender has agreed to wait on a massive payment that should have been paid yesterday.
In the filing (in pdf), Donaco confirms that Mega International Commercial Bank will give the company until the end of this year to come up with the $5 million principal payment that it was expected to hand over yesterday. In addition, the bank has “granted a waiver on all June 2020 covenants under the Facility Agreement, until 31 December 2020, including that the aggregate amount of cash and cash equivalents investments of the Donaco group to [not be less] than AUD$20 million [$13.89 million] at any time on or after 30 June 20 and the Donaco Hong Kong Limited 2020 Interest Coverage Ration and Debt to EBITDA (earnings before interest, taxes, depreciation and amortization) financial covenant.”
The news is great for Donaco, which is behind the Star Vegas Resort in Cambodia and the Aristo International Hotel and casino in Vietnam. It’s also beneficial for Mega Bank, which will certainly find interest from other businesses that may want, at some point, to capitalize on the bank’s generosity.
COVID-19 has turned the international gaming scene upside down and recovery is going to be an uphill climb for the next few years. Donaco certainly isn’t the only casino operator looking for a little flexibility with its payment schedules, and a number of companies, including Wynn Resorts and MGM Resorts, have had to seek creative methods to cover their losses. Prudent planning and frugality are most likely the new common themes across the majority of businesses recovering from the health pandemic and, if not, they should be.
Donaco knows that it needs to find ways to expedite its recovery and will begin working on methods for boosting its bottom line, even if it means more cuts could be made. It adds in the filing that it will continue “to consider liquidity measures and sources of a capital injection to guarantee the business remains in a sustainable and dynamic position during this period of global uncertainty” and specifies that it agreed with Mega Bank that “the proceeds of any capital injection prior to December 31, 2020 should be used to settle the US$5-million principal payment when received.”