Case Study - Donaco
Background
- Donaco operates leisure and entertainment businesses across the Asia Pacific Region.
- Listed on the Australian Stock Exchange: (ASX:DNA)
- Significant disputes existed between former owners of the casino estates and the existing management. Disputes diverted attention from the underlying business and weakened cash flow.
- Operated in jurisdictions where locals were not able to participate in Donaco’s entertainment suite.
- Donaco’s entertainment facilities relied on cross-border traffic.
- Covid-19 Pandemic, led to the closure of border crossings. Donaco’s leisure and entertainments businesses had a drastic reduction in patronage.
- Appointed to the Board of Directors, to stabilise management and operations through financial difficulties.
- Assisted in the financial restructure and capital raising exercise.
Strategy
- To find a compromise settlement between parties locked in litigation and ensure an honourable exit for both parties.
- Develop options to enhance the financial position of Donaco.
- Protect the company during the Covid-19 pandemic.
- Refinance a major secured facility.
- Develop a business plan for post Covid-19.
Results
- New management and a new board were implemented.
- All parties exited the dispute on amicable terms.
- Steady state business plan was adopted. However, the new business plan was cut short due to Covid-19.
- Given the effect of Covid-19, it was necessary to seek further capital to ensure the on-going successful operations.
- Cost-cutting plan was introduced to keep the entertainment parks operating on a much lower capacity. Entertainment facilities were placed on care and maintenance.
- Capital and lending solutions were examined toprovide the best options for liquidity.
- Raised AUD$14,000,000 which provided sufficient funding to operate throughout the Covid-19 pandemic.
- Donaco now operates on a cash flow positive basis and is now looking for opportunities