Star mulls $650m lifeline as another exec settles with ASIC

Troubled Star Entertainment has received a potential financial lifeline from US-based Oaktree Capital as another one of its former top executives struck a deal with the corporate cop.

Former Star Entertainment chief casino officer Greg Hawkins.

Troubled Star Entertainment Group has received a potential $650m financial lifeline from a US fund as one of its former top executives struck a deal with the corporate cop over alleged breaches of money laundering controls at its casinos.

Star disclosed on Monday that the debt proposal from Oaktree Capital Management was subject to regulatory approval and numerous other conditions. Star has warned its ability to continue as a going concern is in doubt unless it can revamp its finances.

The debt plan comes as former Star chief casino officer Greg Hawkins became the second Star executive to settle with ASIC in the ongoing Federal Court case over alleged breach of money laundering controls and fiduciary duties.

Mr Hawkins has agreed to be fined $180,000 and accept an 18-month disqualification from managing corporations as part of the deal. Mr Hawkins is now acting chief operating officer at Bloomberry Resorts in the Philippines.

ASIC earlier this month struck a deal with former chief financial officer Harry Theodore ahead of the start of a case against his fellow executives, agreeing to be disqualified from running a corporation for nine months and fined $60,000.

The casino operator said a commitment letter and term sheet from Oaktree set out terms on which the financier would be willing to provide a total of $650m over a five-year term. Star shares rose 12.5 per cent to 14c on Monday.

Former Star Entertainment chief casino officer Greg Hawkins.

The proposal would likely see Star’s lending syndicate, including Westpac, Barclays and Soul Patts, selling their debt to Oaktree at a discount.

“The proposal is subject to numerous conditions, including a comprehensive security package and intercreditor documentation which requires consents from New South Wales and Queensland governments and regulators,” Star said in a statement to the ASX.

Star said the proposal was not conditional on the company raising subordinated capital nor any waiver or deferral of tax payable to State governments.

Hunter Green IB director Charlie Green said that with more than 10 lenders potentially collapsing into one, “Star can stop herding cats now and start running the business better.” “The tone of this is more positive than many recent releases from Star,” said Mr Green.

Star said its board would consider the proposal, but there was no certainty it would be progressed or associated conditions would be satisfied.

“The group continues to explore possible liquidity solutions,” the company said. “While discussions continue with respect to a range of different solutions, there is no certainty that any of these discussions or negotiations will result in one or more definitive arrangements that might materially increase the group’s liquidity position.

“In the absence of one or more of those arrangements, there remains material uncertainty as to the group’s ability to continue as a going concern.”

The Australian’s DataRoom column revealed in January that Oaktree, which recapitalised Australian healthcare provider GenesisCare, was keen to recapitalise Star by way of a convertible bond. But it walked back the idea last year when the company’s state of distress was becoming increasingly evident.

Star Entertainment chief executive Matt Bekier

Star revealed last week it had been approached about the sale of the debt-laden Queen’s Wharf precinct in Brisbane from its Hong Kong-based partners in the project.

The Star confirmed it had “received several confidential, indicative and non-binding proposals” from Chow Tai Fook Enterprises and Far East Consortium seeking to acquire The Star’s 50 per cent interest in Queen’s Wharf along with other assets.

Both Hong Kong investors have a 25 per cent stake in the Brisbane casino precinct that opened last year. Star said its board had assessed each of the proposals received to date, and after careful consideration, which has included external advice, concluded that “none of the proposals provided sufficient value for the company.”

Star has already sold off the old Treasury casino building in Brisbane and its Sydney event centre in a desperate bid to raise cash to stay afloat.

Separately, ASIC is set to finish tendering documents in the case against Star’s former executive team and board this week. The now nine defendants in the case have until February 21 to notify the court if they will offer any evidence or claim there is no case to answer.

Remaining defendants include former CEO Matt Bekier, company secretary Paula Martin, former Star chairs John O’Neill and Benjamin Heap as well as former high-profile directors Sally-Anne Pitkin, Kathleen Lahey, Gerard Bradley, Wallace Sheppard and Zlatko Todorcevski.

Federal Court Justice Michael Lee in a hearing on Friday said ASIC and Mr Hawkins had reached an agreement on a resolution to the regulator’s claims against him. Justice Lee ordered the case against Mr Hawkins be referred to another judge for settlement.

Originally published as Star mulls $650m lifeline as another exec settles with ASIC