Bally's Offers a Lifeline to Struggling Star Entertainment
Bally's proposes acquisition of Star Entertainment for a $250 million sum.
In a surprising turn of events, US gaming behemoth, Bally's Corporation, has thrown a lifeline to the troubled Australian casino operator, Star Entertainment. Bally's is willing to shell out a whopping AU$200 million (€163 million) for a 50.1% majority stake, subject to certain conditions and approvals.
Last week, Star Entertainment managed to avert temporary insolvency by selling its stake in the Queen's Wharf project in Brisbane for AU$53 million (€42.5 million) to Hong Kong investors Far East Consortium International and Chow Tai Fook Enterprises. Despite financial woes, Star opened its new integrated resort in August 2024. The company has also managed to regain full control of its casino resort on Australia's Gold Coast.
The potential takeover by Bally's has been a hot topic of discussion on Australian TV.
Star Entertainment's Troubled Past
In recent years, Star Entertainment has faced serious challenges with money laundering prevention and anti-fraud measures, resulting in heavy fines. The Queensland government fined Star AU$100 million (€71.5 million) in 2022, while the NSW gambling regulator fined them AU$15 million (€10.7 million) for inadequate money laundering prevention in 2024. Additionally, civil lawsuits have been filed against ten former executives for their links with organized crime and their tolerance of money laundering risks.
Star Entertainment's Financial Crisis
Star Entertainment has been grappling with financial difficulties due to its stock suspension since last year. Trading in its shares was suspended on August 28, 2024, and has not resumed since, due to a missed deadline for filing the 2024 annual financial results. However, the company has received a funding pledge of AU$250 million (€187 million) from investment firm King Street Capital Management and a refinancing option for up to AU$940 million (€685 million) in debt from an unnamed lender.
The Future of Star Entertainment
It remains uncertain whether Star Entertainment will accept Bally's offer and whether the rescue of the struggling gambling giant will succeed. The deal is contingent on shareholder and regulatory approvals, and the details of the revised agreement are subject to further approvals and conditions. As of the latest updates, the parties have amended the deal after significant input from Star’s largest shareholder, Bruce Mathieson. The final decision is yet to be made.
Omkar Joshi, Chief Investment Officer at Opal Capital Management, commented on the latest developments surrounding Star Entertainment:
They've been given more time to tackle their cash flow issues, having access to new liquidity, which is helpful. [...] It's good to see various options emerging that could potentially avoid a voluntary administration process. [...] The board and management of Star still have a lot of work to do, comparing plans and seeing if this latest proposal from Bally might bring forth others.
- What will happen to Star Entertainment's future? It remains uncertain whether they will accept Bally's $200 million offer in 2022, and if this rescue attempt will be successful.
- In the Australian casino industry, US gaming corporation Bally's Corporation is planning to acquire a 50.1% stake in the struggling Star Entertainment.
- The potential takeover by Bally's comes after Star Entertainment faced financial woes, including a suspended stock, missed deadlines for filing annual financial results, and heavy fines for money laundering prevention and anti-fraud measures.
- Star Entertainment's financial crisis has prompted various options to emerge, such as the funding pledge from King Street Capital Management and the refinancing option for up to $940 million in debt. These developments are being closely watched by finance and business executives.
