Star Entertainment considers $650m debt refinancing offer

February 17, 2025

Star Entertainment considers $650m debt refinancing offer

Embattled casino operator Star Entertainment Group has been offered a $650 million financial lifeline over five years by Oaktree Capital Management.

The operator is considering the funding by the California-based firm, majority owned by Canadian giant Brookfield Asset Management, which deals in what is known as distressed debt. This deal could provide the company with the breathing room it needs to recover from its ongoing battles with regulators and its financial struggles.

The proposal, requiring approval from the New South Wales (NSW) and Queensland governments, would still leave the company short of funds before the deal kicks in.

“There is no certainty that the proposal will be progressed, that the conditions to the proposal will be satisfied, or that the proposal will be implemented,” the company said in an announcement to the Australian stock market.

Moreover, the announcement noted that if the Star proceeds with the proposal, it will require additional funding for the period prior to the proposal being implemented.

“There remains material uncertainty as to the group’s ability to continue as a going concern.”

The struggling Star

This comes as Star Entertainment has been under pressure for months, dealing with regulatory fines, failed asset sales, and dwindling cash reserves. The company recently reported that its cash balance dropped to AUD 79 million by December 2024, down from AUD 150 million just six months earlier. Additionally, Star has already used half of its AUD 200 million debt facility, leaving limited room for manoeuvre.

The operator has been in talks with Hong Kong-listed partners, Chow Tai Fook Enterprises Limited (CTFE) and Far East Consortium International Limited (FEC), have shown interest in acquiring the controlling 50 percent stake in the Destination Brisbane Joint Venture (DBC) which owns The Star Brisbane integrated resort.

The Star confirmed the proposals, which have now been knocked back. The company that it has received the proposals and concluded “that none of the proposals have provided sufficient value for The Star.”

New York-based private equity giant Blackstone is reportedly considering acquiring the Star Entertainment. The potential deal is seen as a strategic move to capitalise on The Star’s poker machine assets while the company battles mounting financial difficulties.

Star Entertainment has been embroiled in crisis since a regulatory probe into its Sydney casino found severe anti-money laundering and counter-terrorism lapses. A second inquiry found the company still falling short of the necessary standards for responsible management and identified additional licence breaches, including falsifying records.

Star’s Sydney casino operations have remained under scrutiny by the New South Wales Independent Casino Commission (NICC), which also imposed a AU$15 million fine because of ongoing compliance issues. A spokesperson for the company confirmed that Star is closely cooperating with regulators to tackle governance issues and adhere to mandatory regulations.