Star Entertainment said Monday it is considering a A$250 million ($157 million) cash injection proposal from U.S. casino operator Bally’s Corp., which is seeking to take a controlling interest in the embattled Australian company.
Under the proposal sent by Bally’s late last week to Star’s board, Bally’s would give Star fresh capital in exchange for notes convertible into at least 50.1% stake of the Brisbane-based casino operator’s fully diluted ordinary shares.
“The board of Star will review Bally’s proposal,” Anne Ward, chairwoman of Star’s board, said in a statement. “However, there is no certainty that it will be progressed.”
Bally’s proposal came hours after Hong Kong billionaire Henry Cheng’s Chow Tai Fook Enterprises and tycoon David Chiu’s Far East Consortium agreed on Friday to pay Star A$53 million for its stake in the Brisbane integrated casino complex. Star will immediately receive A$35 million from its Hong Kong partners, injecting much needed cash to the embattled company, which counts Australian billionaire Bruce Mathieson among its shareholders, Far East said in a statement.
Separately, Star also said Friday it had signed an agreement with King Street Capital Management for a A$250 million short-term debt facility, and was in talks with another party to borrow up to A$940 million.
“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,” Soo Kim, chairman of Bally’s, wrote in the letter to the Star board.
Star has been racing to raise fresh capital amid slumping gaming revenues. Last month, the company said it is exploring various options to increase its liquidity, including the sale of its stake in the Brisbane property, as it has limited capacity to raise A$150 million in subordinated debt.
The troubles of Star started in 2021 after the Sydney Morning Herald reported that the company allowed money laundering and organized crimes in its casinos for years. The following year, regulators ruled that the company was unsuitable to operate its casinos in Sydney and Queensland, placing them under government supervision. Since then, almost A$4 billion in Star’s market capitalization has been wiped out.
Read the full article here