US casino giant Bally’s Corporation offer $250m lifeline to rescue Star Entertainment

[Pelican Press 0]

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US casino giant Bally’s Corporation offer $250m lifeline to rescue Star Entertainment

US casino group Bally’s Corporation is offering embattled Star Entertainment a $250 million lifeline that could rescue the gaming group from financial ruin.

The last-minute bid comes just days after debt-laden Star sealed a deal to sell a half share of its newly opened Brisbane casino at Queen’s Wharf to Hong Kong joint venture development partners Chow **** Fook Enterprises and Far East Consortium for $53 million.

But media reports on Monday said Bally’s had proposed injecting hundreds of millions of dollars into Star to preserve its “businesses, assets and platforms”, according to a letter sent to chair Anne Ward — potentially up-ending the ***** of the casino.

Chow **** Fook and Far East have already paid $35m.

Star also revealed on Friday that it had entered into an agreement with King Street Capital Management for a $250m short-term debt facility, and was in talks with another party to provide up to $940m of debt.

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is reporting that Bally’s is offering “an alternative pathway”, with the group to provide at least $250m through an issue of convertible notes subordinated to Star’s principal lenders. The notes would be convertible into a minimum of 50.1 per cent of Star’s fully diluted ordinary shares, giving Bally’s control.

“To be clear, we remain very open to discussing a larger transaction depending on our discussions with respect to Star’s liquidity and capital needs,” Bally’s chair Soo Kim wrote in the letter.

“We would also be happy to explore alternative structures that would similarly preserve value for all key constituents, including regulators, creditors, equity holders and employees.

“Our proposal is fully funded and not subject to any financing contingencies.”

Bally’s operates 22 casinos, hotels and resorts across the US and is preparing to open one in Newcastle in the ***, according to its website.

It was also reported that Mr Kim had offered to partner with Star “in deploying our significant operating experience in turning around casino assets and growing highly successful casino businesses.”

“We are prepared to invest significant time and resources to work with the company to return Star to profitability and sustainability. We have retained experienced financial and legal advisers and are prepared to engage immediately,” The *********** reported Mr Kim writing in the letter.

“While we understand the rationale for Star’s recently announced transactions, we believe that our proposal offers Star and its stakeholders far greater value and operational flexibility, as well as the upside from retaining Star’s current projects and other assets.

“We have already completed substantial due diligence based on publicly available information and leveraging our understanding of the *********** gaming market and extensive experience in the international gaming sector.

“As a result, we are well positioned to work with Star in a focused manner to deliver a binding proposal within a short ******* of time.”

Star’s troubles started in October 2021, when it was reported the casino operator had enabled suspected money laundering, organised crime and fraud at its operations for years.

Since then, inquiries by local gaming regulators have found it unsuitable to operate its Sydney and Queensland casinos, placing them under government supervision.

Star now holds $400m in debt and at December 31 had only $79m cash at hand.

The offers from both its Hong Kong partners and Bally’s come just days before Star is expected to run out of money and fall into administration.

Star’s shares have been suspended from trade on the *********** Securities Exchange since last Monday after it failed to lodge its half-year results.

The company said it could not sign off on the accounts without a bailout.

Putting its share on hold last week, Star repeated a warning made early in February that without a rescue deal to pull in cash it may not be able to continue as a viable business.

Its shares later returned to trade and fell more than 17 per cent to 11¢, valuing the company at just $307 million.

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