• Donaco International is set to be delisted from the Australian Securities Exchange (ASX) after shareholders overwhelmingly approved a takeover by Hong Kong fund Argyle Street Management.
• The AU$0.045 per share all-cash offer was approved by 98.11% of investors at a meeting on 1 August and has now received final court approval.
• The sale was driven by severe “financial headwinds,” primarily at its flagship DNA Star Vegas property in Cambodia.
• The Cambodian casino has been hit by political border tensions with Thailand and the rising compliance costs of Cambodia’s new, stricter gambling laws.
• The company’s chairman cited a lack of investor confidence and an inability to raise funds for growth as key reasons for accepting the deal.

The turbulent run of Southeast Asian casino operator Donaco International on the Australian Securities Exchange (ASX) is coming to an end. The company is being taken private after shareholders voted almost unanimously to accept a takeover offer from On Nut Road (ONR), an investment vehicle controlled by the Hong Kong-based fund Argyle Street Management.

The AU$0.045-per-share cash offer, which represented a 50% premium to Donaco’s undisturbed share price, secured the backing of 98.11% of investors. Following the vote, the Supreme Court of New South Wales approved the scheme of arrangement, clearing the final hurdle for the acquisition. Argyle Street Management, a specialist in distressed Asian assets, has been an investor in Donaco since 2019 and already held a 12.84% stake.

A ‘Double Blow’ for Cambodian Operations

Donaco’s decision to sell was forced by a severe and worsening situation at its flagship property, the DNA Star Vegas casino in Poipet, Cambodia. The property, which is heavily reliant on customers crossing the border from Thailand, has been crippled by a “double blow” of geopolitical and regulatory pressures.

First, escalating political tensions between Cambodia and Thailand have led to the closure of key border crossings, choking off the casino’s primary source of customers. Second, Cambodia’s new commercial gambling law, introduced in 2020, has significantly increased compliance costs and regulatory scrutiny on smaller operators as the country seeks to attract large-scale integrated resorts. This hostile operating environment led to a 62% year-on-year collapse in traffic at Star Vegas in June and a 57% plunge in group EBITDA for the second quarter.

Lack of Investor Confidence Forces Sale

The company’s non-executive chairman, Porntat Amatavivadhana, said the board’s decision was driven by “a combination of financial headwinds, limited profit margins and a lack of substantial investor confidence.”

He made it clear that the company’s position on the public market was no longer tenable, adding that “fundraising efforts for any form of growth have been particularly challenging.” The sale was therefore presented as a necessary step to provide value to shareholders in the face of insurmountable operational challenges.

The Path to Delisting

Trading in Donaco shares on the ASX was suspended at the close of business on 8 August. The company will be formally delisted shortly. Shareholders who were on the register as of 12 August will receive their cash payout for the sale on 19 August, bringing an end to the company’s difficult tenure as a publicly listed entity.