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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”.

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