Donaco International has been making steps to getting back on course, and the Australian-listed gambling provider has come a long way. Donaco announced in February that it might need help to cover the lost ground, and now has found some breathing room.
In a filing with the Australian Securities Exchange from yesterday, the firm stated that its main lender has agreed to wait on a huge payment that should have been cleared yesterday.
In the filing, Donaco conforms that Mega International Commercial Bank will give the firm until the end of 2020 to come up with the $5 million principal payment that it was expected to submit yesterday.
Moreover, the bank has “granted a waiver on all June 2020 covenants under the Facility Agreement, until 31 December 2020, including that the aggregate amount of cash and cash equivalents investments of the Donaco group to [not be less] than AUD$20 million [$13.89 million] at any time on or after 30 June 20 and the Donaco Hong Kong Limited 2020 Interest Coverage Ration and Debt to EBITDA (earnings before interest, taxes, depreciation and amortization) financial covenant.”
That’s great news for Donaco, which operates the Aristo International Hotel and casino in Vietnam and the Star Vegas Resort in Cambodia. It’s also important for Mega Bank, which will surely find interest from other companies that may want, at some point, to take advantage on the bank’s generosity.
The coronavirus has turned the international gambling scene upside down and recovery is going to be a huge task for the next couple of years. Donaco certainly is not the only gambling provider seeking some flexibility with its payment schedules, and some businesses, including MGM Resorts and Wynn Resorts, have had to seek creative methods to cover their losses.
Prudent planning and thriftiness are most likely the new common themes across many of the businesses recovering from the global pandemic and, if not, they should be.
Donaco knows well that it must find means to accelerate its recovery and will start working on ways to boost its bottom line, even if it means additional cuts could be made.
The filing goes to say that Donaco will continue “to consider liquidity measures and sources of a capital injection to guarantee the business remains in a sustainable and dynamic position during this period of global uncertainty” and states that it agreed with Mega Bank that “the proceeds of any capital injection prior to December 31, 2020 should be used to settle the US$5-million principal payment when received.”