Asian casino operator Donaco International Limited has reportedly agreed a compromise to the long-running legal dispute involving the 50-year lease for the land occupied by its Star Vegas Resort and Club in Cambodia.
According to reports from Inside Asian Gaming and GGRAsia, the Sydney-listed firm inked the agreement for the Star Vegas Resort and Club almost five years ago in exchange for approximately $360 million and claimed that the arrangement included a provision that had prohibited the vendors from opening a competing facility.
However, Donaco International Limited was reportedly later forced to get an injunction from a Cambodian court after the owner of the land, Lee Hoe Property Company Limited, opened its nearby Star Paradise gambling venue. This entity is purportedly controlled by local businessmen Lee Bug Leng, Lee Bug Huy and Lee Bug Tong and subsequently responded by threatening to void the earlier lease deal and force the venue in the border town of Poipet to close forever.
GGRAsia reported that the disagreement had additionally spawned a lawsuit in Australia alongside an action in Singapore that involved Donaco International Limited seeking some $190 million in damages. But the operator purportedly declared early last month that it was pausing all of these legal actions for eight weeks in an effort to see if the parties could come to some sort of a resolution.
Donaco International Limited reportedly used an official Monday filing to describe the newly-agreed lease deal with Lee Hoe Property Company Limited as a ‘pragmatic and fair settlement’ to its ‘long-running dispute’ that is to cover its flagship Star Vegas Resort and Club for at least the next 95 years.
The operator reportedly stated that the arrangement will see it pay some $38 million in cash in exchange for the lengthened lease term alongside approximately $18 million so as to settle its partner’s unpaid management fee claims with interest. It purportedly proclaimed that it has moreover consented to the removal from the original 2015 lease deal of all non-compete and non-solicitation clauses and is to furnish Lee Hoe Property Company Limited with ‘any outstanding rent’ as well as a resumption fee worth $20 million.
Reportedly read the filing from Donaco International Limited…
“The share sale agreement will be amended to acknowledge the existence of the competing casino constructed near to the Star Vegas Resort and Club.”
For its part and Inside Asian Gaming reported that the new deal furthermore commits Donaco International Limited to paying a monthly rent of $20,000 until 2025 with this rate rising to $30,000 for the ensuing five years. This charge will purportedly afterwards rise by 3% every three years while the operator is to additionally be required to hand over 25% of any earnings before interest, tax, depreciation and amortization above $16 million from the Cambodian property until the end of 2025.
The filing from Donaco International Limited reportedly read…
“The settlement reached provides certainty of tenure for the Star Vegas Resort and Club’s business and will conclude all disputes between the parties. It will also allow the company and management to now focus on the forward momentum of the profitable Star Vegas Resort and Club business and continued improvements to the company’s balance sheet and financial position ahead of any Covid-19 impacts to second-half revenue and earnings.”