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Donaco (ASX:DNA) shareholders to chip in for capital raise, management changes announced
  • Donaco International (DNA) has announced the details of its fully underwritten $14.4 million entitlement offer, as well as changes to management
  • One of the two individuals underwriting the offer, Lee Bug Huy, will become a Non-Executive Director of Donaco
  • Three other changes in management were also announced by the company in today's entitlement offer announcement
  • Meanwhile, the money raised through the entitlement offer will become working capital, and help pay off a loan with Mega Bank
  • The capital raise comes after COVID-19 decimated the casino industry, and directly impacted Donaco's operations
  • Donaco's share price increased today, trading up 11.4 per cent at 3.9 cents per share

Casino and hotel operator Donaco International (DNA) has announced it will undertake a $14.41 million capital raise, via a non-renounceable fully-underwritten pro-rata entitlement offer.

Under the terms of the entitlement offer, eligible shareholders will be offered one new share, priced at 3.5 cents each, for every two shares already held in the company.

COVID-19 loss

The $14.41 million raised will become working capital, as well as help balance out Donaco's balance sheet.

The company admits it has struggled with the effects of COVID-19, which saw casino and hotels across the globe shut amid lockdown restrictions.

In a statement, Donaco said management decided the company was in 'urgent need of capital' as a result of 'the impact of COVID-19 on the company's gaming operations'.

The company also revealed the money was needed to make repayments on a loan from Mega Bank.

"The funds raised from the [entitlement] offer will be used to make principal repayments of US$10 million (approximately A$14.55 million) under the company’s facility with Mega Bank," wrote Chairman Mel Ashton in a letter to shareholders.

Main players

The entitlement offer is fully underwritten by Donaco's own shareholders, Lee Bug Huy and Lee Bug Tong, who have a 17.99 per cent interest in the company.

Donaco said the decision to have the duo underwrite the offer came as the company wasn't able to source any other appropriate alternative sources of capital.

But, the company also revealed Lee Bug Huy would become a Non-Executive Director of the company, once the offer was successfully completed.

He and Paul Porntat Amatavivadhana would replace current Non-Executive Directors Mel Ashton and Simon Vertullo.

The board of Donaco is also recruiting for additional directors.

Chip in

Following the announcement, a prospectus on the entitlement offer has been released.

It reveals the new share price - of 3.5 cents - represents a 7.6 per cent discount on the seven-day average. The offer is scheduled to close on July 23, 2020

The prospectus also revealed shareholders who don't participate in the offer, will likely see their holdings diluted by approximately 33.3 per cent.

Donaco shares closed up 11.4 per cent, at 3.9 cents each.


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