Australia’s Star Entertainment Group is said to have asked US casino operator Bally’s to increase its AU$250 million (US$158 million) offer to acquire a controlling stake in the company as it continues to explore options to avoid going into administration.
The Australian Financial Review reports that Star and its bankers have been trading term sheets with the goal of reaching a deal that would enable the troubled Australian company to continue as a going concern. However, any such deal will need to be reached imminently amid suggestions that Star is again just days away from running out of cash.
According to the AFR, Star is seeking considerably more than the AU$250 million Bally’s offered previously for convertible notes that could be converted to 50.1% equity in the company should it receive regulator and shareholder approvals. Bally’s previously indicated it was open to discuss terms.
The latest report also suggests Star would look for another equity placement worth up to 15% in the company without needing to acquire shareholder approval. Such a measure would, however, appear to be another stopgap given that Star’s shares, once trading at AU$5.73, were at AU$0.11 when trading was halted on 1 March. This values the company at just AU$316 million (US$189 million).
Talks with Bally’s have become urgent for Star after a proposed deal to refinance debt to the tune of almost AU$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 proposal assumes the US operator would 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.
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