Donaco International said it’s seeking to raise $14.4 million capital through a pro-rata entitlement offer due to an “urgent” need for funds because of the impact of Covid-19 on its business.
Shareholders will be entitled to 1 new share for every two shares held at a price of $0.035, representing a discount of about 10 percent. The stock price dropped by that amount on Monday to reflect the transaction.
. The offer is underwritten by Lee Bug Huy and Lee Bug Tong who together hold a 17.66 percent stake in the Australia-listed operator.
“Covid-19 travel restrictions, the consequent closing of international borders and the closure of casinos in Cambodia and Vietnam have significantly impacted the financial position of the company,” Non-Executive Chairman Mel Ashton said in a statement to the exchange. “This capital injection will enable us to stabilise our immediate financial needs and meet the upcoming repayment requirements on our borrowings.”
He added that the capital, together with a proactive cost-cutting strategy, will stabilize the company’s balance sheet at a critical time.
Ashton will step down as non-executive chairman once the offer has been completed, while Lee Bug Huy and Paul Porntat Amatavivadhana will be appointed as non-executive directors. The company is also seeking to recruit further directors.
Donaco operates the Aristo International casino in northern Vietnam and the Star Vegas property in Poipet, Cambodia.