Star eyes Bally's lifeline after talks collapse on new debt package
Embattled casino operator Star Entertainment announced that it was exploring a lifeline from US casino group Bally’s Corporation after it had “not received a binding debt commitment letter” from Salter Brothers Capital, leading to the withdrawal of its AUD940 million ($592.2 million) refinancing proposal.
The company said in a filing on the Australian Stock Exchange that “there remains material uncertainty as to the Group’s ability to continue as a going concern.” The breakdown in talks with Salter Brothers Capital refinancing was despite Star having “continued to work diligently” with them on the deal, that would have seen the casino business receive sufficient liquidity into the company’s near empty coffers.
Why did the talks collapse?
The effort involved “relevant third parties, including state governments and regulators,” according to the statement. Star said the withdrawal follows extensive engagement with the company, and the agreement collapsed because “it became apparent that it was unlikely that a number of the conditions precedent to the refinancing proposal would be… satisfied, either at all or in sufficient time to address the current liquidity needs of the company.”
In particular, “lender requirements for specific priority arrangements and enforcement rights in relation to their proposed security over non-gaming assets of The Star [Entertainment] could not be met.” Therefore, the company is continuing to explore liquidity solutions including Bally’s Corporation’s unsolicited bid offering to inject at least A$250 million in capital in exchange for a 50.1 percent stake in the company.
Bally’s offer for Star
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, which is backed by Star’s largest shareholder, Bruce Mathieson, 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.
Star had then said it would review the proposal, one of several that it is currently considering as it struggles to continue as a going concern and tries averting voluntary administration. The recent offer, if progressed, would value Star at about A$500 million, marking a huge dip from its market capitalisation of A$3.5 billion in 2021.
Earlier this week, New South Wales Independent Casino Commission (NICC) announced that Star’s Sydney casino license will remain suspended for at least another six months. This decision, announced after a review of submissions from both Star and the independent manager appointed by the NICC, comes as the company continues its remediation efforts. The oversight will remain in place under the leadership of Nick Weeks, the NICC-appointed independent manager, until at least 30 September 2025.
