Donaco International Limited has officially confirmed its engagement in a Scheme of Arrangement with On Nut Road Limited (ONR), a specialized entity managed by Argyle Street Management Limited (ASM). This arrangement positions ONR to acquire all remaining shares of Donaco, promising A$0.045 in cash per share to current shareholders.

Key details of the acquisition scheme:

ONR’s proposal to buy out Donaco comes with a promise of A$0.045 per share, amounting to a significant premium above recent trading prices. This offer values Donaco’s total equity at approximately A$55.59 million, showcasing a 54.10% premium to the 90-day volume-weighted average price leading up to the announcement. Donaco’s Board has unanimously urged shareholders to approve the deal, emphasizing its potential to stabilize shareholder value amidst the fluctuating dynamics of the entertainment industry.

The acquisition provides a concrete cash offer to shareholders, mitigating the inherent risks of a volatile market. Donaco has navigated through economic uncertainties, amplified by narrow profit margins and subdued investor confidence, which have collectively hampered growth and investment potentials. The proposed scheme is seen as a strategic move to solidify financial foundations and ward off economic pressures exacerbated by the COVID-19 pandemic.

Moreover, looming regulatory changes in Thailand introducing casino franchises in Bangkok pose new challenges to Donaco’s operations, particularly affecting its border casinos. Recent governmental actions have also led to sporadic power cuts between Thailand and Cambodia, further straining Donaco’s operational capabilities. This backdrop makes the timely consideration of ONR’s offer even more critical for the shareholders.

Unwavering support from major stakeholders:

Significant backing for the acquisition comes from Donaco’s largest shareholders, Lee Bug Huy and Lee Bug Tong, who control a substantial portion of the company’s equity. Their support underscores the perceived benefits of the scheme as a fortuitous exit strategy amidst uncertain times.

The implementation of this acquisition is contingent upon a series of legal approvals and the satisfaction of customary conditions. The shareholder meeting slated for June will be a decisive moment for the scheme’s approval, requiring a majority vote in favor. Donaco is committed to keeping shareholders well-informed, with detailed documentation to be distributed ahead of the critical voting session.

Porntat Amatavivadhana, Donaco’s Non-Executive Chairman, highlighted the scheme’s alignment with shareholder interests, providing them with a secure and advantageous financial resolution. He stated in the company’s press release (pdf): “We have carefully considered the merits of the Scheme, and we believe On Nut Road Limited’s offer provides compelling value to Donaco shareholders, representing a 54.10% premium to the 90-day volume weighted average share price. The Board believes that the Scheme is in the best interest of shareholders, providing certainty Donaco International Limited ACN 007 424 777 2 in the form of a cash payment to shareholders while removing the risks associated with the cyclical nature of our business.”

The decision to endorse ONR’s offer follows careful consideration of the company’s current challenges and the broader market conditions, aiming to secure a resilient future for the shareholders and the company alike.