Embattled casino operator Star Entertainment has been offered an A$250 million recapitalisation package by Bally’s that could give the US casino group majority control.
Star has received an from the US gaming powerhouse offering to inject at least A$250 million in capital in exchange for a 50.1 percent stake in the company. 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.
“Bally’s would partner with Star in deploying our significant operating experience in turning around casino assets and growing highly successful casino businesses globally,” Bally’s chairman Soo Kim said in a letter to Star released to the Australian Securities Exchange (ASX) on 10 March (Monday).
Star reviewing proposals
Star 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
This comes just days after Star with U.S. hedge fund King Street Capital Management and a week after 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.
This agreement will see the Hong Kong partners paying A$53 million ($33.4 million) for Star’s stake in the Brisbane project, Far East said in a filing on the Hong Kong Exchange (HKEX). The first payment of A$35 million will be made on 7 March (Friday). The deal injects crucial funds into the company’s nearly empty coffers.
The company is also considering a debt refinancing proposal from an unidentified US investor of up to $940 million and a $650 million refinancing offer from US debt investor Oaktree Capital Management.
Star’s shares have been suspended from trading on the public markets from March 3 (Monday). This was owing to the operator failing to lodge its half-yearly earnings report on 28 February (Friday). The ASX notified the market of suspension on Monday. In a on Monday, Star confirmed that to disclose its half yearly results, the company needed to refinance its debt.
