Star Entertainment’s Strategic Moves Amid Financial Challenges

• Star Entertainment’s largest shareholder supports Bally’s AU$250 million buyout for a controlling stake.
• Bruce Mathieson, already owning 10% of Star, aims to increase his stake to 20%.
• Star has received offers from other companies interested in its assets to boost liquidity.

The struggling Australian gaming giant, Star Entertainment Group, appears to be on the brink of accepting a financial rescue proposal from Bally’s Corporation. This development follows an endorsement of the deal from the group’s principal shareholder.

Star Faces Intensifying Pressure to Divest Key Stakes to Overcome Current Challenges

Bally’s Corporation has proposed an investment of AU$250 million, equivalent to around $160 million, to secure a 50.1% controlling interest in Star. The move aims to assist the group in overcoming its financial and regulatory hurdles.

Bally’s remains optimistic about Star Entertainment Group’s potential to regain stability. The company believes Star possesses the essential assets to thrive in the Australian casino sector. This confidence has been echoed by Bally’s Chairman, Soo Kim, who has reiterated these sentiments in several interviews in recent weeks.

‘It is not too late. Our proposal is not subject to due diligence or consent or anything. We can do this. Every deal we’ve done, people say ‘There’s no value there, or it is too hard’. We are usually the buyer of last resort,’ Kim expressed to the Australian Financial Review, emphasizing Bally’s unique position to aid Star Entertainment Group through this challenging phase.

Kim reaffirmed Bally’s Corporation’s initial commitment made in early March. He highlighted the company’s strategy to rejuvenate Star’s assets while maintaining shareholder value, a vital factor in considering any offer that would effectively transfer control of the group to another entity.

Bruce Mathieson, a businessman known for his interests in pubs and poker machines, currently holds a 10% stake in Star Entertainment Group. He has expressed his willingness to support the deal, proposing to invest an additional AU$50 million, approximately $31 million, to boost his stake in the group to 20%.

The Largest Shareholder Seeks to Expand Influence

Mathieson has received regulatory approval to increase his stake to 20%, potentially easing Star’s path to convince its Board and shareholders to accept Bally’s Corporation’s controlling stake offer.

Star has been navigating turbulent financial waters, engaging in discussions with two other prominent partners, Chow Tai Fook and Far East Consortium, both based in Hong Kong.

These companies are exploring the acquisition of Star’s 50% stake in The Star Brisbane property, which opened last August. This acquisition would strengthen their foothold in the Australian land-based casino market while providing Star with needed liquidity during this challenging period.

Upon receiving Bally’s proposal in early March, Star’s board stated it was under review, though it remained uncertain whether the proposal would be pursued.

In February, Oaktree Capital Management offered a refinancing option for Star Entertainment’s AU$650 million debt, providing the company with additional time to address its current challenges.