Donaco International plans to raise AUS$14.4 m ($9.99 m) for immediate working capital and use it to strengthen its balance sheet.
The Australian casino operator said the urgent need for capital is due to the effect on the market that COVID-19 has had, mainly associated with travel restrictions.
Donaco operates several Asian venues such as Star Vegas Resort in and Club in Cambodia and Lao Cai Casino (with Aristo International Hotel) in Vietnam, which had to be shut down temporarily.
The company plans to collect the money by basing it on a “fully underwritten pro rata non-renounce-able entitlement offer.” For every two existing shares which they hold, qualifying holders will be able to purchase one new share. The issue price is AU$0.035 for those new shares.
Lee Bug Huy and Lee Bug Tong, who hold an 18 percent stake in the company, underwrote this new strategy to raise capital. The underwriters will be willing to increase their stake in Donaco to 45 percent. The bid expires July 23.
Mel Ashton, the non-executive chairman of Donaco, said the capital raised would be used to limit debt, preserve shareholder value and provide immediate financial stability for the group’s key objectives.
Ashton commented: This capital injection will enable us to stabilise our immediate financial needs, and meet the upcoming repayment requirements on our borrowings,” adding that the new funding would be combined with cost-reduction measures and additional equity to improve the financial situation of the company.