Australian-listed casino operator Donaco International said it expects to incur “cash consumption rates” of between US$800,000 and US$900,000 per month during the temporary closure of its two casinos. Those costs include costs related to “maintenance of casino assets” and other “related enterprise costs,” the company said in a filing on Tuesday.
Donaco’s flagship location, Star Vegas Resort and Club, is near the border between Cambodia and Thailand. The Aristo International Hotel and related casinos (pictured) are near the border between Vietnam and China. Both buildings have been temporarily suspended due to the negative impact of the COVID-19 pandemic.
“This temporary action follows the announcement by the Cambodian government to mandate the closure of all casinos from April 1, 2020, and the Vietnamese government’s action to temporarily close all casinos for 15 days from April 1, 2020,” Donaco said in a recent filing.
The company said it was introducing a range of measures to reduce costs during the closure “to ensure the sustainability of the company in the future.”
“As a result, Donaco has had to take difficult but inevitable steps regarding its employees, including staff cuts, staff furloughs, casual staff departures and postponement of non-essential spending,” the company told the Australian Stock Exchange.
The company also said it was working to reduce its operations and capital expenditures. As of March 31, 2020, Donaco had a cash balance of US$11.6 million, according to Tuesday’s filing.
“The situation we face with the COVID-19 pandemic is unprecedented and unfortunately, we have had to take some drastic steps, including layoffs and pay cuts, with our employees,” the document quoted Donaco Chairman Mel Ashton as saying
Mr Ashton added: “This is ultimately about keeping the business going and eventually rebuilding the team and getting operations back on track, keeping our finances sound.”
The filing also confirmed that Donaco is still in discussions with the group’s main lender, Mega International Commercial Bank, Inc., regarding a settlement of a lawsuit with a supplier of its Star Vegas business. The company also added that it is seeking to amend the June 30, 2020, agreement regarding its term lending facility.
“Donaco continues to consider liquidity measures and capital input sources to ensure its business remains in a sustainable and dynamic position during this period of ongoing global uncertainty,” it said in the filing.
“The duration of the COVID-19 outbreak and the duration of the casino closure will clearly affect the capital input requirements, but … The board is confident that it can raise the capital needed to strengthen its balance sheet and the ability to maintain its business during the long closure period.”
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