Long running legal battle comes to an end after non-compete clause dropped and commercial arrangements agreed.
The Asian casino operator has agreed to remove a non-compete clause and to renew Donaco’s Star Vegas lease for 95 years.
“The share sale agreement will be amended to acknowledge the existence of the competing casino constructed near to the Star [Vegas] casino,” Donaco Chairman, Mel Ashton, said.
In return, Donaco will receive a US$38 million payment from its former partners.
The settlement brings multiple proceedings to an end including an arbitration claim in Singapore, where Donaco was seeking US$190 million in damages.
It also ends a Cambodian court battle over a disputed 50-year land lease deal for Star Vegas, both related to Donaco’s assertion that the vendors continued to run gaming operations in Poipet in defiance of non-compete provisions.
According to Inside Asian Gaming, in the new lease agreement running until 2115, Donaco will pay the vendors US$20,000 per month for the first five years and US$30,000 per month for the following five years, with rent then increasing by 3% every three years.
Donaco will also pay 25% of any Star Vegas EBITDA in excess of US$16 million for the next five years.
“The settlement reached provides certainty of tenure for the Star Vegas business and will conclude all disputes between the parties. It will also allow the Company and management to now focus on the forward momentum of the profitable Star Vegas business, and continued improvements to the Company’s balance sheet and financial position ahead of any COVID-19 impacts to second half revenue and earnings,” Donaco said in a statement.