Star financing proposal withdrawn; Bally’s offer back on table
On April 2, Star Entertainment, a prominent operator within the Australian gaming landscape, announced that its negotiations with Salter Brothers regarding a significant refinancing proposal have unfortunately collapsed. In light of this setback, the company is now re-engaging in takeover discussions with Bally’s Corporation.
In a recent filing with the Australian Securities Exchange (ASX), Star confirmed that the refinancing proposal, which was initially put forward on March 7, has been officially withdrawn. This proposal was intended to provide financial relief of up to AU$940 million (£453.2 million/€544 million/$588.5 million), a sum substantial enough to enable a comprehensive restructuring of the company’s existing debt portfolio.
Despite Star’s attempts to extend the exclusivity period for negotiations, certain pivotal conditions could not be fulfilled, ultimately leading to the proposal’s retraction.
“The withdrawal of the Refinancing Proposal follows extensive discussions between The Star and Salter Brothers Capital, as well as relevant third parties, including state governments and regulators,” the company elaborated. “Our dialogue revealed that several prerequisite conditions for the refinancing proposal were unlikely to be satisfied within the necessary timeframe to address the company’s immediate liquidity requirements.”
“Specifically, the lenders’ demands for certain priority arrangements and enforcement rights concerning their proposed security on non-gaming assets could not be accommodated,” they continued.
With this impasse, Star remains unable to finalize its financial reports for the first half of the fiscal year ending December 31, and its shares continue to be suspended from trading.
Reinitiated Talks with Bally’s Corporation
The stalled negotiations with Salter Brothers initially indicated Star’s preference for that potential route; however, with no alternative solutions on the horizon, the company has begun discussions with Bally’s Corporation concerning their earlier proposal submitted on March 10.
Bally’s representatives notably visited Star’s facilities in February, culminating in a AU$250 million offer for a 50.1% stake in the company. This offer, however, expired without action on March 28, creating a sense of urgency as other prospects for Star’s independent survival appear increasingly limited.
As of now, Bally’s has not issued any comments regarding the renewed discussions.
Notably, Bruce Mathieson, Star’s largest individual shareholder, has been an advocate for the Bally’s acquisition. Reports from the Australian Financial Review on March 22 indicated that Mathieson is prepared to contribute an additional AU$50 million to support this deal, provided he receives a larger equity stake and a position on the board.
The Implications of the Queen’s Wharf Exit
The ongoing negotiations with Bally’s are further complicated by Star’s recent decision, announced on March 7, to exit its multibillion-dollar Queen’s Wharf joint venture in Brisbane. Star divested its 50% stake in the venture for AU$53 million, significantly below market value, to its existing partners Chow Tai Fook and Far East Consortium. This transaction was crucial for Star as it aimed to alleviate its financial and debt obligations tied to the project.
However, Bally’s did not support this divestiture and expressed a desire to retain Star’s full array of assets. Their proposal, submitted just days following Star’s announcement about the Queen’s Wharf exit, asserted that “our proposal provides Star and its stakeholders with considerably greater value and operational flexibility, in addition to benefiting from retaining Star’s ongoing projects and other assets.”
Bally’s Chairman, Soo Kim, previously conveyed to the Australian Financial Review that “it is not too late” to secure a deal. The feasibility of Star retracting its Queen’s Wharf sale remains uncertain at this juncture.
