Funds associated with Oaktree Capital Management, a U.S.-based asset management firm, have proposed providing AUD650 million (US$413.3 million) to troubled Australian casino business The Star Entertainment Group Ltd. The money would be to refinance debt held by the gaming firm.
The casino operator said in a Monday announcement to the Australian Securities Exchange that outlined the offer, it would “consider the proposal”, but that for now, “there remains material uncertainty as to the group’s ability to continue as a going concern”.
The filing said the funds linked to Oaktree Capital Management had furnished a commitment letter and term sheet setting out terms under which Oaktree would be willing to provide the AUD650 million in two debt facilities with a term of five years.
The filing added the proposal was subject to “numerous conditions”.
These included, said Star Entertainment, “a comprehensive security package and intercreditor documentation which requires consents from [the] New South Wales and Queensland governments and regulators; completion of due diligence in relation to specified matters”; that certain existing lenders “enter a settlement and or refinancing agreement on terms satisfactory to Oaktree”; and “the execution of long-form financing documentation and other conditions”.
In Macau, Oaktree Capital Management is a minority investor in the Studio City casino resort, majority owned by Melco Resorts & Entertainment Ltd.
Oaktree Capital Management also controls gaming supplier Interblock dd, a specialist in fully- and semi-automated electronic table games, and video gaming machines. Interblock has a presence in Asian markets, and its products are also available in other regions worldwide, including North America, Europe and Australia.
In Monday’s filing, Star Entertainment outlined there was “no certainty” the refinancing proposal from Oaktree Captial Management would come to fruition.
The casino firm added: “If The Star proceeds with the proposal, the company will require additional funding for the period prior to the proposal being implemented.”
It said it “continues to explore possible liquidity solutions”.
On February 10, the firm acknowledged it had received an offer to acquire its 50-percent interest in the Queensland, Australia real estate venture containing The Star Brisbane casino resort.
The offer was from Hong Kong-headquartered and privately-held Chow Tai Fook Enterprises Ltd, and Hong Kong-listed Far East Consortium International Ltd, which are already investors in the Destination Brisbane Consortium.
Star Entertainment also runs The Star Sydney casino resort in Sydney, New South Wales.
Star Entertainment said in its Monday update: “While discussions continue with respect to a range of different solutions, there is no certainty that any of these discussions or negotiations will result in one or more definitive arrangements that might materially increase the group’s liquidity position.”
It added: “In the absence of one or more of those arrangements, there remains material uncertainty as to the group’s ability to continue as a going concern.”
