Hong Kong’s Argyle Street Management proposes full buyout of Donaco International
Hong Kong-based Argyle Street Management Limited has offered to acquire all outstanding shares in Southeast Asian casino operator Donaco International Ltd through its special purpose vehicle, On Nut Road Ltd (ONR). The proposed deal values Donaco at AUD55.59 million (US$35.2 million), with ONR offering AUD0.045 per share. This represents a 50 percent premium on Donaco’s closing price of AUD0.030 on 14 March and a 54.10 percent premium to the 90-day volume-weighted average price.
According to media reports, Donaco’s Board of Directors has unanimously recommended shareholders approve the scheme without a better proposal. The company’s largest shareholders, Lee Bug Huy and Lee Bug Tong, who control 42.17 percent of Donaco’s issued capital, have also expressed their support under the same conditions. A shareholder meeting to vote on the proposal is expected in June. Donaco’s casino assets include Star Vegas in Poipet, Cambodia and Aristo International in northern Vietnam.
Operational challenges and financial position
Donaco’s Non-Executive Chairman, Porntat Amatavivadhana, described the offer as an opportunity for shareholders to secure cash returns amid ongoing financial challenges. While Donaco has shown growth, with net revenue rising 12.2 percent year-on-year to AUD21.83 million in the six months ending 31 December 2024, its narrow profit margins and limited investor confidence have impacted growth efforts. EBITDA increased 17 percent to AUD11.39 million, and net profit after tax improved by 36.3 percent to AUD7.77 million during the same period.
Potential risks and market changes
Amatavivadhana pointed to several operational risks, including power supply issues along the Thailand-Cambodia border that have affected Donaco’s DNA Star Vegas property in Poipet. He also cited concerns about Thailand’s new gaming legislation, which could impact casino visitor numbers to Donaco’s border casinos. Last week, Thailand announced that Bangkok, Chon Buri, Chiang Mai, and Phuket will host the country’s first integrated entertainment complexes, including casino facilities. The 500-billion-baht project aims to attract 50 million visitors annually, create 40,000 jobs, and boost tourism. Each complex will feature hotels, malls, and attractions, with casinos occupying less than 10 percent of the space.
Background on ONR’s involvement
ONR has been an investor in Donaco since 2019, holding 12.84 percent of the company’s shares. The firm previously played a role in a boardroom restructuring following Donaco founder Joey Lim’s default on a loan repayment.
Details regarding the upcoming Scheme Meeting and further developments will be announced by the company soon.
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