Logo of Phnom Penh Post newspaper Phnom Penh Post - Donaco wins injunction over Poipet casino dispute

Donaco wins injunction over Poipet casino dispute

Motorists drive past the Star Vegas casino in Poipet.
Motorists drive past the Star Vegas casino in Poipet. Vireak Mai

Donaco wins injunction over Poipet casino dispute

Australian-based casino operator Donaco International Ltd announced on Tuesday that it had been awarded an injunction to freeze shares held by three Thai vendors of its Star Vegas casino business, located in the Cambodian border town of Poipet

The injunction, ordered by the Supreme Court of New South Wales, restrains the defendants from selling their 148 million Donaco shares – representing about 18 percent of the company’s total shares – until an ongoing arbitration in Singapore finishes.

Donaco is seeking $120 million in that arbitration, the latest move in a monthslong battle between Donaco and three former Thai business partners who Donaco claims violated a non-compete clause and cost the firm over $100 million in revenue.

The dispute stems from a decision by Donaco to enter the Poipet market by purchasing the $360 million Star Vegas property in July 2015.

At first the decision proved fruitful, and Donaco saw a significant uptick in overall profits, with the Poipet casino contributing nearly 84 percent of the company’s $107 million in revenue during the following fiscal year.

The three previous owners of the Star Vegas – named in the ASX statement as Somboon Sukcharoenkraisri, who also has a Cambodian passport under the name of Lee Bug Leng; his son, Techatut Sukcharoenkraisri (Lee Bug Huy according to his Cambodian passport); and another son, Bhuvasith Chaiarunrojh (Lee Bug Tong according to his Cambodian passport) – would later prove to be troublesome for the Australian gambling firm.

In late September 2016, buoyed by its boost in profits, Donaco expanded its gambling services in Poipet to the adjacent Star Paradise property – also owned by Sukcharoenkraisri and sons – where it managed 40 gaming tables and 50 slot machines.

Donaco held exclusive rights to purchase the operation of the new gaming floor “provided it [was] attractive to do so from Donaco shareholders’ perspective”, according to the company’s report on the ASX.

However, in the summer of 2017, Donaco let its Star Paradise contract lapse, apparently abandoning any intention of expanding its casino operations in the long term.

While Donaco claims it retained exclusive rights to the casino operations on Star Paradise property even after the lapse, the company says the Thai trio continued to run gambling operations at the Star Paradise, in violation of a non-compete clause signed during the original purchase of the Star Vegas in 2015.

In December last year, Donaco won an injunction in the Banteay Meanchey Provincial Court to close the Star Paradise casino, but on the same day announced that the Thai trio was running a second casino, known as Paramax.

Donaco claimed in a report in February that it had incurred a 25.7 percent loss in revenue during the second half of last year, which it attributed to a near $110 million non-cash impairment loss due “to the [Star Vegas] vendor breaching non-compete provisions”.

MOST VIEWED

  • Kingdom's Covid cluster cases jump to 194

    The Ministry of Health on February 25 confirmed 65 new cases of Covid-19, with 58 linked to the February 20 community transmission. The latest cluster cases include nine Vietnamese nationals, five Cambodians, one each from Korea, Singapore and Japan, with the rest being Chinese. This brings the total number

  • Locations shut, dozens more Covid-19 positive

    The Ministry of Health has closed 23 locations in connection with the February 20 community transmission of Covid-19 and summoned for testing anyone who had direct contact with affected people and places. The number of discovered related infections has risen to 76, including 39 women. In a press release,

  • Cambodia's Covid cluster cases rise to 137

    The Ministry of Health on February 24 recorded 40 more cases of Covid-19, with 38 linked to the February 20 community transmission. Of the 40, two are imported cases involving Chinese passengers. The 38 include two Vietnamese nationals and one Cambodian, with the rest being Chinese. This brings the total cases

  • Covid cluster raises alarm, health bodies urge vigilance

    The Ministry of Health and the World Health Organisation (WHO) in Cambodia have expressed great concern over the February 20 cluster transmission of Covid-19 in the community. Both entities appealed for vigilance and cooperation in curbing further spread of the virus. Ministry spokeswoman Or Vandine said

  • PM confirms third Covid-19 community transmission

    Prime Minister Hun Sen on February 20 announced the Kingdom's third outbreak of Covid-19 community transmission after 32 people tested positive in just over 10 hours. Addressing the public from his residence after an emergency meeting, Hun Sen said: "I dub it February 20 Community Event, in which 32 cases

  • Cambodia's cluster cases jump to 259

    The Ministry of Health on February 27 recorded 26 more cases of Covid-19 linked to the February 20 community transmission, bringing the total to 259 in one week. The 26 include three Vietnamese nationals and one Cambodian, with the rest being Chinese. The ministry noted that five of the Chinese