Australian-listed Donaco International Limited says it has formally concluded a settlement agreement with the Thai vendors and owners of the property upon which its flagship Star Vegas casino, located in Poipet, Cambodia, sits.
The settlement agreement, first announced last March, officially brings to an end a litany of legal proceedings between the two parties while allowing for the company to renew its Star Vegas lease for 95 years. The delay in concluding the agreement had been on a delay in Donaco’s main lender, Mega International Commercial Bank Co Ltd, granting permission to proceed.
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As previously reported by Inside Asian Gaming, Donaco had been involved in an arbitration claim against the Thai vendors in Singapore, where Donaco was seeking US$190 million in damages, and in a Cambodian court battle over a disputed 50-year land lease deal for Star Vegas, both related to Donaco’s assertion that the vendors continued to run gaming operations in Poipet in defiance of non-compete provisions.
Details of the agreement announced last March suggested Donaco had ceded considerable ground in negotiations with the Thai vendors in order to guarantee the continuation of Star Vegas operations.
Those concessions, aside from dropping litigation, include removing non-compete provisions from the Share Sale Agreement between the parties, allowing the Thai vendors to continue running gaming operations at Star Paradise, the competing casino they built next door to Star Vegas in 2016.
Under a new lease agreement running until 2115 and now ratified, Donaco will pay the vendors US$20,000 per month for the first five years and US$30,000 per month for the following five years, with rent then increasing by 3% every three years. Donaco will also pay 25% of any Star Vegas EBITDA in excess of US$16 million for the next five years.
The settlement agreement was ultimately made possible by a December 2019 boardroom coup that saw the majority of the previous management regime voted out. The Thai vendors subsequently increased their stake in Donaco from 17.99% to 42.08% via an entitlement offer, appointing Lee Bug Huy and Paul Porntat Amatavivadhana as new additions to the board. Lee Bug Huy was named Donaco’s new CEO in September 2020.
