Struggling Star Entertainment agrees to be rescued by Bally's
Embattled casino operator Star Entertainment has agreed to take lifeline from US casino group Bally’s Corporation, local media has reported. The agreement would see Bally’s take control of the operator as part of a A$250 million ($149.8 million) deal.
In addition, Star’s largest individual shareholder, Bruce Mathieson, while backing the Bally’s deal had pledged to invest an additional A$50 million in the company if the deal goes through. Apart from the deal, Mathieson, a well-known figure in Australia’s pub and gaming industry, holds about 10 percent stake in Star. Local reports said he could raise his stake in Star and take a seat as a board member should the deal progress. Reports also indicate that Mathieson has regulatory approval to increase his stake to as much as 20 percent.
Bally’s offer
In early March, Star received an unsolicited bid from Bally’s offering to inject the capital in exchange for a 50.1 percent stake in the company. Under the deal, Bally’s said it was willing to convert its offer into subordinated convertible notes. These notes would eventually convert into a 50.1 percent majority stake in Star. Bally’s recapitalisation package is fully funded, not subject to approval and as stated by the company’s Chairman Soo Kim, is “very open” to discussing a larger transaction.
This deal became a top priority for Star Entertainment after a failed attempt to refinance nearly AU$1 billion in debt. Star had announced that it was exploring a lifeline from Bally’s after it had “not received a binding debt commitment letter” from Salter Brothers Capital, leading to the withdrawal of its AUD940 million refinancing proposal. Without the refinancing, Star was on the verge of serious financial distress. In a statement, Star said, that “there remains material uncertainty as to the Group’s ability to continue as a going concern.”
Sale of stake in Brisbane complex
The company was also eyeing a last-minute deal to sell its stake in its Brisbane complex to its Hong Kong partners, Chow Tai Fook Enterprises and Far East Consortium Enterprises, which is yet to be finalised. This agreement would see the Hong Kong partners paying A$53 million for Star’s stake in the Brisbane project, Far East said in a filing on the Hong Kong Exchange (HKEX). Star was able to secure the first payment of A$35 million, a deal that injected crucial funds into the company’s nearly empty coffers.
It was also recently revealed that Chow Tai Fook Enterprises (CTFE) has come under scrutiny for its concealed relationship with criminal junket operator, local media has reported. The company has recently been at the center of a Queensland government investigation concerning its relationship with convicted criminal junket operator, Alvin Chau.
