US casino white knight Bally’s says Star’s future now bright

US-based casino giant Bally’s says its buyout will allow Star Entertainment to regain its position as ‘Australia’s preeminent gaming destination’.

The Star Casino group at Queen’s Wharf Brisbane. Picture: David Clark

US-based casino giant Bally’s Corp says its $300m buyout of troubled Star Entertainment will allow the business to regain its position as “Australia’s preeminent gaming destination.”

Bally’s will take a 57 per cent equity stake in Star as part of the deal announced on Monday night that has saved Star from almost certain financial collapse.

Bally’s says it “will invest in and partner” with Star as it applies its proven track record of revitalising underperforming casino businesses.

“Bally’s will continue to work collaboratively with regulators and stakeholders to support a successful turnaround of The Star,” the company said in a statement.

“Strategically, the transaction is intended to preserve The Star’s long-term potential, with Bally’s committed to leveraging its operational expertise to deliver a more resilient and sustainable business for all stakeholders.”

Bally’s chairman Soo Kim said the transaction provided his company with the opportunity to “infuse The Star” with what it needs to regain its position as a preeminent gaming destination.

Bally’s chairman Soo Kim.

“It allows The Star shareholders to share in what we confidently believe will be a brighter future together,” Mr Kim said.

Bally’s owns 19 casinos in the US as well as operations in the UK with about 17,700 poker machines, 630 table games and, 3950 hotel rooms. Its chairman, Mr Kim, describes himself as a “corporate fireman” who companies call when they get into trouble.

Bally’s will take majority control of the board once the deal is finalised by appointing new or replacing existing directors. In the meantime, it will have observer status at board meetings.

Bally’s president George Papanier said the company was excited to bring its reputation and operating expertise “to a wonderful set of properties that operate in fantastic markets. We are up for the challenge.”

Shares in Star are expected to resume trading this week after being suspended since early March by the ASX due to its failure to lodge its half-year accounts.

With the financial rescue package now sealed, the release of those accounts can now be finalised, followed by the resumption of trading on the stock exchange.

The shares last traded at 11c each, having a massive 42 per cent decline so far this calendar year as the company’s financial troubles mounted.

Shaw and Partners senior investment adviser Adam Dawes said Bally’s were good operators who could see the strategic value of acquiring a foothold in the Australian market.

“Star needed the money and would have been happy to keep things moving,” said Mr Dawes. He said the company may have to continue to sell some assets to stabilise its finances further. Star last month announced it was selling its 50 per cent stake in the Queen’s Wharf casino precinct in Brisbane to its Hong Kong joint venture partners Chow Tai Fook Enterprises and Far East Consortium to reduce its crippling debt levels.

Pubs billionaire Bruce Mathieson, who is currently Star’s biggest single shareholder with an almost 10 per cent stake, could invest up to $100m as part of the Bally’s deal. If Mr Mathieson tips in that amount, Bally’s own contribution would drop to $200m.

Originally published as US casino white knight Bally’s says Star’s future now bright