21st December 2012. Shareholders of gaming software firm Two Way Limited (ASX: TTV) have approved a Share Sale Agreement with Donaco Singapore Pte Ltd (DSL) to acquire DSL’s business and to transform Two Way into a new online and premises-based gaming and wagering, leisure and hospitality group that will pursue growth opportunities in the Asia Pacific region.
DSL was founded in Singapore in 2002 to pursue gaming, entertainment and trading activities by the late Tan Sri Lim Goh Tong, who was also the founder of the Genting Group of Companies. Equity interests in Donaco have since passed to his grandsons: Lim, Keong Yew and Lim, Keong Hoe.
The agreement provides for the acquisition of DSL through the issue of 261,724,250 fully paid ordinary shares at $0.30 per Share for a total consideration of A$7.85m. DSL’s sole asset is its 75% interest in the Lao Cai, Vietnam gaming and resort development. Subject to the result of a capital raising, the result is the owners of DSL will be entitled to approximately 95% of the issued capital in Two Way, consisting of Convent Fine Ltd 48.36% and Slim Twinkle Ltd 46.46%.
The shareholders have also approved the change of the company name from Two Way Limited to Donaco International Limited. The stock re-lists on the ASX 1st February 2013 under the new code DNA. Also approved was a consolidation of TTV’s existing issued capital on a 20 to 1 basis and the appointment of three directors representing the equity interests of the new majority
Two Way was formed in 1990 and was listed on the ASX in 2004 raising A$40m. It creates, develops and builds interactive media and gambling applications for mobile phones, internet and IPTV platforms. For the financial year to 30th June 2012, Two Way recorded revenue of A$1,362,416 (2011: A$1,595,288) and a loss of $1,287,657 (2011: A$1,029,197).
Commenting on the completion of the transaction the Chairman of Two Way, Mr Stuart McGregor, said: “This is a “step change” transaction for the Company and we look forward to the new opportunities that will be created by combing the online and interactive expertise of Two Way with the casino and hospitality management skills of Donaco.”
The key asset of the combined entity will be a 75% stake in the luxury Lao Cai International Hotel in Lao Cai, Vietnam, which is currently undertaking a major expansion, including a boutique style casino under licence from the Ministry of Planning and Investment in Vietnam. The 25% JV partner is Sapa Petrol Tourism (Sapa), an entity associated with the Vietnamese Government. Sapa has interests in travel and tourism services, infrastructure and real estate investment and financial investment.
The company estimates the total investment for the expansion to be in the region of US$43m of which US$13m has already been expended. DNA is liable for 100% of the construction cost with its JV partner, Sapa Tourism already having contributed the land component. DNA has a debt facility in place with Ocean Bank to complete the project.
The transaction also involves a restructuring of the Two Way board, with the addition of Donaco representatives Mr Lim Keong Yew, Mr Benjamin Lim Keong Hoe and Mr Mak Siew Wei as directors. Mr Lim Keong Yew and Mr Benjamin Lim Keong Hoe are grandsons of the late Tan Sri Lim Goh Tong, the founder and former Chairman of Genting Berhad, the holding company of the various Genting and Resorts World operating entities across Asia.
Commenting on behalf of Donaco, Mr Lim Keong Yew said: “The wagering and hospitality industry is going through significant change across the Asia Pacific region and we believe that this transaction will deliver synergies and benefits that will position Donaco International as a significant participant in the industry.”
“We are creating a cash-flow positive and profitable ASX-listed company and Donaco entered into the transaction with Two Way after identifying Australia as a solid, low risk environment with professional investors who understand the gaming sector.”
Mr Lim from Donaco said that while the priority was to complete the expansion of Lao Cai International Hotel, Donaco International would explore a range of new online gaming and potential casino opportunities. “The combined skills sets of Two Way and Donaco means that we can consider new interactive media and gambling applications, while also pursuing new licenses that will allow us to develop and operate hotels and casinos,” Mr Lim said.
Baillieu Holst Ltd has acted in a corporate advisory role for Donaco International noted in a research report “The fast road from China: Vietnamese citizens are not permitted to gamble in their own country. As such, Lao Cai Hotel is virtually totally reliant upon Chinese “high rollers” who have been sourced by junket operators. Lao Cai is bordered by the Chinese province of Yunnan with a population of c46m. Lao Cai is connected to Kunming (capital of Yunnan) by a newly constructed four lane expressway. We expect the group to be extremely acquisitive across a range of assets in the Asia region with a continuing focus in the gaming and leisure spaces.
History of Two Way Ltd
TTV formed in 1990 and was listed on the ASX in 2004 raising $40m through the issue of 40m shares. TTV creates, develops and builds interactive media and gambling applications for mobile phones, internet and IPTV platforms. Main product platforms are:
– TAB ACTIVE which is an interactive TV wagering service in Australia, available through Pay television operators, Foxtel and Optus; and
– Way2Bet, an online and mobile portal offering information to race wagering punters.
TTV’s interactive wagering product connects the at-home punter to their wagering accounts with Australia’s major operators such as Tabcorp, TattsBet and a range of corporate bookmakers.