Goh Tong’s grandsons to be removed from Donaco

This article first appeared in The Edge Malaysia Weekly, on June 3, 2019 - June 09, 2019.

Until recently, Donaco was the vehicle of Keong Yew (left) and Keong Hoe

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A host of questions are hanging over the management of casino operator Donaco International Ltd, which until recently was the vehicle of Joey Lim Keong Yew and Benjamin Lim Keong Hoe — the grandsons of the late casino baron Tan Sri Lim Goh Tong, the founder of the Genting group of companies.

Come July 18, Keong Yew and Keong Hoe may be removed from the board of Australia-listed Donaco as shareholders controlling a substantial stake in the company have sought their removal at an extraordinary general meeting (EGM) under section 249D of the Corporations Act 2001.

The shareholders seeking the removal of Keong Yew and Keong Hoe are Antonia Caroline Collopy, who is the wife of Jack Collopy, portfolio manager at Australia-listed financial services outfit Perpetual Investment Management Ltd, and, more importantly, James Spenceley, the founder of Australia’s fourth largest telecommunications company, Vocus Communications, in which Perpetual was an initial investor.

Collectively, Collopy and Spenceley have a 5.04% stake in Donaco. Spenceley accumulated 38.54 million shares between Feb 4, 2019, and May 24, 2019, while Collopy had three million shares.

Interestingly, Spenceley is also the chairman of Silver Heritage Group, which has interests in casinos and gaming venues, such as The Millionaire’s Club and Tiger Palace Resort in Nepal, among others. Similarly, Donaco owns Star Vegas Resort and Club in Poipet, Cambodia, and Aristo International Hotel, which has an adjoining casino, in Lao Cai, Vietnam.

Both Keong Yew and Keong Hoe declined to comment for this article.

Spenceley, however, has made clear his plans. “I just want to get it done as soon as possible,” he told the Australian Financial Review when asked to comment on the removal of Keong Yew and Keong Hoe at the upcoming EGM.

“The priority is to get the Lims off the board. That is what needs to happen for the company to get back on investor watch lists … there is so much earnings potential in the business but no one is going to touch it as it is.”

Spenceley was appointed chairman of Silver Heritage in May last year and in October, the company announced the appointment of Ben Watiwat as chief financial officer. Watiwat had held senior positions at Spenceley’s Vocus group in the past, and handled treasury, tax, M&A and capital management, among others.


Issues at Donaco

Keong Yew and Keong Hoe are the sons of the late Datuk Lim Tee Keong, the oldest son of Goh Tong. Tee Keong had died a bankrupt in April 2014.

The issues at Donaco came to light in December last year when Keong Yew sought a three-month leave of absence from his position as CEO and managing director “to deal with health and personal matters”. Keong Hoe then took up the reins.

Prior to losing control of Donaco, Keong Yew had owned 28.1% of the company and held 13.03% jointly with Keong Hoe.

In May 2017, Keong Hoe, via Total Alpha Investments, put 27.25% of Donaco up as collateral for a US$34.28 million financing arrangement with OL Master (Singapore Fund 1) Pte Ltd, a fund managed by Orchard Capital Partners’ OCP Asia Ltd. At end-2018, Total Alpha had difficulty in making its interest payments, resulting in OCP taking over the block of shares.

To cut a long story short, OCP ended up with 37% of Donaco as the fund had acquired a 9.7% stake earlier.

The problems at Donaco have not been limited to its shareholders. The company has also been at loggerheads with the previous Thai owners of Star Vegas Resort. According to the company, the latter breached an agreement on running casinos that competed with Donaco. The dispute is with arbitrators in Singapore and also in the Cambodian courts.

Meanwhile in Vietnam, Aristo International Hotel’s casino has problems of its own — its patrons are being threatened by a Chinese crime syndicate that is forcing them to visit syndicate-controlled casinos.

Not surprisingly, Donaco suffered a net loss of A$124.5 million in its financial year ended June 30, 2018, which included an impairment charge of A$143.9 million on the value of the casino licence of Star Vegas Resort due to its dispute with the Thai businessmen.


About Silver Heritage Group

A check on Bloomberg reveals that OCP owns 10.13% of Silver Heritage Group. However, the latter’s shareholding structure is not very clear. For instance, in February this year, Credit Suisse AG surfaced as a substantial shareholder in Silver Heritage  Group with 6.93% equity interest. It is not known for whom Credit Suisse is holding the stake.

Another shareholder of the gaming outfit is UBS AG with 7.06% equity interest.

Silver Heritage Group’s stock has been suspended since September last year for a full review of its accounting operations in Nepal. And in March this year, it suspended gaming operations at its Phoenix International Club in Bac Ninh, Vietnam, indefinitely after table games were no longer included in a revised investment certificate. This came as a blow as Phoenix accounted for about 45% of Silver Heritage Group’s unaudited revenue for the year ended Dec 31, 2018.

Spenceley has been the chairman of Silver Heritage Group since last May.

It is noteworthy that the issues at Donaco have emerged when Keong Yew, Keong Hoe and their sister, Marie Lim Seok Leng, are involved in several acrimonious disputes with their uncles, Tan Sri Lim Kok Thay and Datuk Lim Chee Wah.

Kok Thay is chairman and CEO of the multibillion-ringgit casino and resort operator Genting Bhd.

The group has several ongoing court cases but the two main fights involve the will of the late Tee Keong after he died and the removal of Keong Hoe and Seok Leng as beneficiaries of the Tee Keong Family Trust, a discretionary trust that was set up by patriarch Goh Tong in 1990 for his eldest son and his family.



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