Star extends talks with lender for massive refinancing package

Star Entertainment Group has made headlines on March 25, 2025, by announcing an extension of its exclusivity agreement with Salter Brothers Capital (SBC) as both parties engage in negotiations regarding a substantial deal aimed at refinancing the operator’s troubled debt portfolio.

In a recent Australian Securities Exchange (ASX) filing, Star Entertainment confirmed that the exclusivity period with SBC has been extended until April 1. This refinancing proposal, first disclosed on March 7, offers potential debt relief of up to AU$940 million (approximately £457.5 million/€548.5 million/US$592.3 million). Interestingly, the lender’s identity, SBC, was revealed four days after the initial announcement.

Star expressed optimism on Tuesday, stating that “SBC is working towards making a binding offer” by March 31, which, when finalized, would provide the necessary liquidity to restructure the group’s existing corporate debt. Crucially, this proposal is not dependent on the purchase of senior debt at a discount or any government tax deferrals or waivers.

This proposed structure comes amidst an existing restructuring offer from U.S.-based Oaktree Capital, submitted in mid-February, which included up to AU$650 million in relief across two debt facilities over a five-year term. However, as of March 7, Star indicated that “certain conditions of the Oaktree Proposal have not yet been met,” preventing its approval.

Bally’s Corporation Offer: A Potential Game Changer

Amidst these financial negotiations, Bally’s Corporation has also entered the fray with a significant bid. The two companies have been linked since early February when Bally’s executives visited Star’s properties. On March 9, Bally’s submitted an offer to acquire 50.1% of Star for AU$250 million. The proposal is fully funded by Bally’s, with no contingencies attached, and remains valid until March 28.

A notable supporter of the Bally’s acquisition bid is Bruce Mathieson, Star’s largest individual shareholder. According to the Australian Financial Review, Mathieson has publicly backed the proposal and pledged an additional AU$50 million to further facilitate Bally’s bid. Holding approximately 10% of Star, he has received approval to increase his stake to 20%. If the Bally’s acquisition proceeds, he stands to gain an even larger share and potentially secure a position on the board.

Strategic Moves: The Queen’s Wharf Decision

Intriguingly, the backdrop to Bally’s bid includes Star’s strategic decision to divest its stake in the Queen’s Wharf joint venture. Announced on March 7, this move represents a pivotal shift for Star as it seeks to mitigate the risk of insolvency. Queen’s Wharf, regarded as a multibillion-dollar development, was anticipated to provide significant revenue streams for the company. However, Star’s leadership, under CEO Steve McCann, ultimately deemed the project too costly for an organization facing financial jeopardy.

As part of this divestiture, Star released its commitments to the project, amounting to at least AU$212 million, and exited its 50% stake in a debt facility currently drawn to AU$1.4 billion. The sale of its 50% interest in the joint venture yielded AU$53 million, allowing Star to consolidate full ownership of its Star Gold Coast property.

Bally’s has expressed its dissatisfaction with this sale, emphasizing its desire to acquire all of Star’s assets. In its offer, Bally’s acknowledged the reasoning behind Star’s recent transactions but firmly believes that its proposal provides “far greater value and operational flexibility” for Star and its stakeholders, including the upside of retaining existing projects and assets.

Bally’s Chairman, Soo Kim, reassured stakeholders earlier this month, declaring, “It is not too late [to make a deal]. Our proposal is not subject to due diligence or consents or anything. We can do this.”