A series of rapid developments over the weekend has seen what management of struggling Australian casino firm Star Entertainment Group Ltd called in a Monday filing an “unsolicited” cash bid from United States-based casino firm Bally’s Corp.
The news came soon after Star Entertainment confirmed on Friday, a deal flagged earlier that day for it to dispose to Hong Kong-based real estate partners, Star Entertainment’s 50-percent equity interest in a complex (pictured) where The Star Brisbane casino resort is based.
A separate Friday filing from Star Entertainment announced a commitment for a senior secured AUD250-million (US$157.8-million) bridge loan facility with funds managed by King Street Capital Management, and a refinancing proposal from a separate lender, with potential to provide total debt capacity for the group of up to AUD940 million.
Star Entertainment said the group had signed a financing commitment letter with respect to a AUD250 million senior secured bridge facility with funds managed by King Street Capital Management, described as a global alternative investment firm.
The casino firm added: “The bridge facility commitment has been entered into to provide additional liquidity for the group while it seeks to secure sufficient liquidity in order to be able to implement a longer-term refinancing of the Group’s existing senior debt.”
The casino firm said the conditions precedent to the bridge facility include, among others, “entering into an intercreditor agreement” with Star Entertainment’s existing lenders, and “obtaining relevant probity approvals and regulatory consents for The Star to provide first ranking security over The Star Gold Coast and associated assets”.
“Subject to satisfaction of those conditions, the bridge facility is available to be drawn until 29 April 2025,” it added.
The other Friday filing said Star Entertainment had “binding heads of agreement with its joint venture partners, Chow Tai Fook Enterprises Ltd and Far East Consortium International Ltd,” under which Star Entertainment would “dispose of its 50 percent equity interest in Destination Brisbane Consortium. The entity controls the Queen’s Wharf Brisbane real estate site, where The Star Brisbane casino resort – which had a phased launch starting in August last year – is based.
Star Entertainment said in a Monday filing that the same morning, it “received from Bally’s Corp an unsolicited, non-binding proposal for additional funding”.
The Australian firm added that Bally’s proposal included “a capital raise of at least AUD250 million, pursuant to which The Star would issue convertible notes subordinated to The Star’s existing senior lenders”.
The filing added: “The convertible notes would be convertible into at least 50.1 percent of The Star’s fully diluted ordinary shares.”
It added: “Bally’s would underwrite the entire amount of the capital raise, but would be supportive of providing The Star’s existing shareholders the right to participate in a significant portion of the offering on a pro rata basis.”
Star Entertainment for its part noted: “The letter does not include any details of other proposed terms and conditions.”
The target firm added: “The board… will review Bally’s proposal. However, there is no certainty that it will be progressed.”
Star Entertainment included a copy of a letter from Bally’s, carrying Sunday’s date.
It said among other things: “We have noted Star’s recent announcements and are writing today to propose an alternative path that we believe will benefit all of Star’s key stakeholders, including your regulators, creditors, shareholders and employees.
“In short, we firmly believe that our approach – as outlined in this letter – of new long-term capital plus operational track record will unlock the best alternative for Star and its shareholders.”
Bally’s letter set out its own credentials, including owning and operating 19 casinos across 11 U.S. states, its recent acquisition of a United Kingdom casino, and the group’s portfolio of 11,500 employees, circa 17,700 slot machines, 630 table games, and 3,950 hotel rooms.
Bally’s noted it also runs “interactive gaming” in the U.K. and Spain, via subsidiaries.
