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Hong Kong’s Argyle Street Management Ltd makes offer to acquire 100% of ASX-listed Donaco International

Ben Blaschke by Ben Blaschke
Mon 17 Mar 2025 at 06:42
Donaco looks inward as Lee Bug Huy named new CEO

Star Vegas in Poipet, Cambodia

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Southeast Asian casino operator Donaco International Ltd said this morning that it has entered into a binding Scheme Implementation Deed with On Nut Road Ltd (ONR) – a special purpose vehicle managed by Hong Kong’s Argyle Street Management Limited – for ONR to acquire 100% of the shares in Donaco it doesn’t currently own.

Under the terms of the deal, ONR – which holds 12.84% of Donaco’s issued share capital – would pay AU$0.045 per share, representing a 50% premium on the company’s closing price of AU$0.030 at ASX market close on Friday 14 March and a 54.10% premium to the 90-day volume weighted average share price as of 14 March.

The scheme values Donaco at AU$55.59 million (US$35.2 million).

In a Monday morning filing, Donaco – whose casino assets comprise Star Vegas in Poipet, Cambodia and Aristo International in northern Vietnam – said its Board of Directors unanimously recommends that shareholders vote in favor of the Scheme at a meeting expected to be held in June and in the absence of any superior proposal that may arise.

It also revealed the company’s largest shareholders Lee Bug Huy and Lee Bug Tong, who collectively hold 42.17% of Donaco’s issued capital, have indicated voting in favor of the scheme.

In a statement, Donaco’s Non-Executive Chairman, Porntat Amatavivadhana, said the deal was particularly appealing given the company’s Star Vegas casino in Poipet, Cambodia, faces headwinds from the potential legalization of casino gaming in neighboring Thailand.

“We have carefully considered the merits of the scheme and we believe ONR’s offer provides compelling value to Donaco shareholders, representing a 54.10% premium to the 90-day volume weighted average share price,” said Donaco’s Non-Executive Chairman, Porntat Amatavivadhana.

“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.

“While Donaco has performed steadily in the last few years and has emerged from the pandemic, the company’s financial headwinds have been compounded over the years due to limited profit margins and a lack of substantial Investor confidence. This has made fundraising efforts for any form of growth particularly challenging. The dependence on a single, major shareholder for financial stability becomes even more critical in light of the economic strains brought about by the pandemic.

“Moreover, the new gaming legislation in Thailand to introduce casino franchises in Bangkok could significantly impact the flow of patrons to Donaco’s border casinos. In addition, the impact on costs due to recent actions to cut power along certain towns between Thailand and Cambodia, resulting in intermittent power supply, further complicates our operational conditions.

“Considering the prevailing border issues and uncertain electricity supply, this may present a unique opportunity for Donaco shareholders that may not arise again. Given these factors, it is imperative for Donaco shareholders to look closely at the offer.

“Therefore, the Board believes that the Scheme provides shareholders with a compelling opportunity to de-risk their investment and realize certain value at an attractive premium to historical trading levels leading into this announcement.”

Argyle Street Management, which is reportedly controlled by Thai hotel billionaire Chanin Donavanik, first invested in Donaco through ONR in 2019 after acquiring some of the shares seized from Donaco founder Joey Lim by Orchard Capital Partners after Lim defaulted on a loan repayment in November 2018.

That transaction ultimately saw ONR trigger a boardroom cleanout that included placing two of its own directors on the company’s board.

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Ben Blaschke

Ben Blaschke

A former sports journalist in Sydney, Australia, Ben has been Managing Editor of Inside Asian Gaming since early 2016. He played a leading role in developing and launching IAG Breakfast Briefing in April 2017 and oversees as well as being a key contributor to all of IAG’s editorial pursuits.

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