Donaco International Ltd, an Australia-listed boutique casino group operating in Indochina, announced it has officially settled various legal proceedings with a group headed by the prominent Thai businessman and politician Somboon Sukjaroenkraisri. The Thai group also includes Somboon’s two sons, Lee Bug Huy and Lee Bug Tong.
The settlement reached finalises proceedings in Singapore, Australia, Thailand and Cambodia relating from Donaco’s acquisition of the Star Vegas casino located in the Cambodian-Thai border town of Poipet, according to an Australia Securities Exchange (ASX) release distributed by the board of directors.
The release stated the two parties reached a settlement that amended the perpetual lease agreement, granting Donaco security of tenure over the casino until the year 2115.
In return, Donaco will receive $38 million to remove the non-competition and non-solicitation clauses in the share sale agreement, pay $18 million to settle the claims for unpaid managements fees (plus interest) and pay any outstanding rent and an additional lease payment of $20 million to Lee Hoe Property.
The Thai group has also agreed not to dispose of any Donaco shares for a period of six months from the date of settlement. Somboon Sukcharoenkraisri currently holds 148,199,529 shares – 17.99 percent – of Donaco.
The Thai group said the share sale agreement will be amended to acknowledge the existence of the competing casino constructed near to the Star Vegas casino, the cessation of all legal actions and mutual releases and the management agreement will be terminated.
Mel Ashton, chairman of Donaco, said “We have reached a pragmatic and fair settlement of this long-running dispute, in what we believe is a timely manner. Most importantly the remaining value of the Star Vegas business is retained for shareholders, and we do not expect any changes to the carrying value of the asset as a result of this settlement.”
He added: “This gives us the stable platform we need to press forward on our other two key priorities for shareholders.”
The settlement reached provides certainty of tenure for the Star Vegas business and will conclude all disputes between the parties. It will also allow the company and management to now focus on the forward momentum of the profitable Star Vegas business and continued improvements to the company’s balance sheet and financial position ahead of any COVID-19 effects on second half revenue and earnings, the ASX release stated.
Donaco bought Star Vegas from Somboon’s group for $360 million five years ago.
Under the deal, Somboon retained management of Star Vegas. In return, he received 120 million shares and $60 million annual earnings before interest, taxes, depreciation and amortisation.
Legal issues started when Donaco decided not to extend the management deal in 2017 after accusing Somboon of building two casinos nearby in violation of the non-compete clause of the sale agreement.