Star Entertainment Group’s largest individual shareholder Investment Holdings Pty Ltd has entered into a binding term sheet with US casino operator Bally’s Corp that will see it subscribe for AU$100 million (US$60 million) in convertible bonds, reducing in the process the Bally’s investment from AU$300 million (US$180 million) to AU$200 million (US$120 million).
Star also confirmed by way of a series of filings late Tuesday that it has now completed divestment of The Star Sydney Event Centre to Foundation Theatres after receiving approval from the NSW Independent Casino Commission (NICC) and may now have access to at least some of the AU$60 million (US$36 million) funds currently in escrow.
With the company continuing efforts to shore up its financial position after accepting the AU$300 million bailout deal from Bally’s earlier this week, the AU$100 million pledge from Investment Holdings Pty Ltd – controlled by pub baron Bruce Mathieson – will see its stake significantly increase from around 10% presently.
It would also reduce Bally’s interest in the one-time Australian casino giant from the 56.7% it could have held had it subscribed to and converted the full AU$300 million in convertible notes originally agreed.
The deal with Bally’s, announced Monday, is seen as Star’s last chance to avoid falling into administration and aims to tap into the US firm’s track record of salvaging troubled casinos.
Star said the AU$100 million subscription by Investment Holdings is on the same terms as the Bally’s investment, with both requiring shareholder approval at a meeting scheduled for late June.
Meanwhile, Star said that approval by the NICC of its sale of The Star Sydney Event Centre and other additional spaces within The Star Sydney complex had now seen the AU$60 million exclusivity fee paid by Foundation Theatres into escrow released as consideration for the disposal.
However, the NICC has requested that the proceeds from the disposal, amounting to AU$58.1 million, continue to be held in escrow with amounts able to be released pending its consent. The full amount will be released the day after shareholder approval of the deals with Bally’s and Investment Holdings is obtained.
“If shareholder approval is not obtained, then The Star may request the release of the amounts in escrow subject to the Group’s satisfaction of certain financial viability conditions,” Star said.
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