On Nut Road Ltd., a special-purpose company run by Argyle Street Management Ltd., has reached a full acquisition agreement with Donaco International Ltd., a major operator of border casinos in Vietnam and Cambodia. All remaining shares will be bought by the Hong Kong-based investment fund, which has owned Donaco since 2019, at AUD0.045 per share, which is 50% more than the most recent closing price.
Donaco’s Australian Securities Exchange filing states that the purchase values the company’s fully diluted stock at about AUD55.59 million. At a meeting scheduled for June 3, the board unanimously endorses the proposal and calls on shareholders to support it. With a possible closing date of June 18, the deal also needs court approval.
Financial Growth and Market Challenges
Despite showing growth in recent years, Donaco has faced ongoing financial hurdles. The company reported AUD21.8 million in net revenue from July to December 2024, reflecting a 12.2% increase year-over-year. Its EBITDA climbed 17% to AUD11.4 million, with DNA Star Vegas in Poipet, Cambodia, contributing AUD8.1 million, a 5.7% rise from the previous year.
However, challenges remain. Non-executive chairman Porntat Amatavivadhana emphasized the limited profit margins and investor skepticism, making capital raising difficult. He noted: “The board believes that the scheme is in the best interest of shareholders, providing certainty in the form of a cash payment to shareholders while removing the risks associated with the cyclical nature of our business.”
Additionally, potential casino legalization in Thailand and power supply issues in Cambodian border towns could disrupt Donaco’s operations.
The Lee Bug Huy and Lee Bug Tong families, who collectively own 42.17% of Donaco’s capital, have committed to supporting the acquisition. Amatavivadhana believes this opportunity might not come again, stating: “Considering the prevailing border issues and uncertain electricity supply, this may present a unique opportunity for Donaco shareholders that may not arise again.”
With financial uncertainties and shifting regional dynamics, On Nut Road’s offer presents a chance for shareholders to secure value while mitigating operational risks.
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