Australia’s Star Entertainment Group confirmed Monday it has entered into a binding term sheet with US casino operator Bally’s Corp to take control of the company as part of a US$300 million (US$180 million) deal.
The term sheet, comprising a multi-tranche convertible note and subordinated debt instrument, will see Bally’s assume convertible notes convertible to 56.7% of Star’s issued share capital, while a separate tranche will provide subordinated non-convertible debt of AU$66.6 million.
The last-ditch effort to avoid falling into administration will see Star receive AU$100 million on or before this Wednesday 9 April – allowing it to reach its short-term obligations, plus another AU$200 million wither following a shareholder vote and receiving regulatory approvals, or AU$100 million after a shareholder vote and the remaining AU$100 million after regulatory approvals.
Star also revealed by way of an ASX filing that it is engaging with the company’s largest shareholder Investment Holdings Pty Ltd – controlled by pub baron Bruce Mathieson family – in relation to a possible subscription of up to AU$100 million of the Investment. This investment would, if it takes place, reduce the Bally’s investment to AU$200 million and see Investment Holdings Pty Ltd increase its stake from around 10% currently.
Star said its Board of Directors “intends to unanimously recommend that The Star shareholders vote in favor of the transaction, in the absence of a superior proposal and subject to an independent expert concluding (and continuing to conclude) that the transaction is in the best interests of The Star’s shareholders.”
The company is now preparing its long-due financial statements for the year ended 31 December 2024 which it plans to lodge as soon as possible, Star added.
The Bally’s deal had become urgent for Star after an option to refinance debt to the tune of almost US$1 billion fell through last week.
Another previously announced agreement to sell off its 50% stake in The Star Brisbane to Hong Kong partners Chow Tai Fook and Far East Consortium has yet to be finalized although Star was able to secure an AU$35 million (US$22 million) advance payment to keep it afloat at the time.
The Bally’s deal assumes the US operator will be able to contribute its proven track record of reversing the fortunes of failing casinos, while Chairman Soo Kim has revealed his preference of keeping Star’s Sydney, Gold Coast and Brisbane assets together rather than selling any off.
Kim said at the time of the initial proposal, “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.”
He also promised Bally’s would “partner with Star in deploying our significant operating experience in turning around casino assets and growing highly successful casino businesses globally.”
The Rhode Island-based Bally’s owns and operates 19 casinos across 11 US states, a horse racetrack in Colorado, and holds online sports betting licenses in 13 North American jurisdictions. It recently acquired Aspers Casino in Newcastle, UK and its interactive international division has significant market shares in the United Kingdom and Spain, operating a number of brands including Virgin Games, Monopoly Casino and Bally Bet. The company is also a significant investor in Intralot SA, a global lottery management and services business.
The combined Bally’s portfolio has approximately 17,700 slot machines, over 600 table games and nearly 4,000 hotel rooms, with around 11,500 employees.
Bally’s also holds rights to developable land in Las Vegas at the site of the former Tropicana Las Vegas and is currently developing Bally’s Chicago.
RelatedPosts
