US casino operator Bally’s Corp in 11th-hour bid to rescue ailing Star group

The offer from the Rhode Island-based gambling, betting and entertainment company would inject $250m into Star and open the possibility that its expertise in turning around failing casinos could save the debt-ridden Australian operation.

The Star at Queens Wharf Brisbane. Picture: David Clark

Star Entertainment Group’s board is reviewing an unsolicited offer from US casino group Bally’s Corporation to provide at least $250m in funding, in a move that could rescue the ailing ASX-listed company from administration.

Star confirmed it received a non-binding proposal for additional funding from Bally’s on Monday morning in a statement to the ASX, following The Australian’s report about the offer.

Star said under the proposed transaction, Bally’s would provide a capital raise of at least $250m, under which Star would issue convertible notes.

“Bally’s would underwrite the entire amount of the capital raise, but would be supportive of providing The Star’s existing shareholders the right to participate in a significant portion of the offering on a pro rata basis,” the Bally’s letter stated.

Star said its board will review the proposal. “However, there is no certainty that it will be progressed,” Star said.

US casino giant Bally’s Corp in 11th-hour bid to rescue ailing Star

The offer from the Rhode Island-based gambling, betting and entertainment concern would inject a minimum of $250m into Star and also open the possibility that its expertise in turning around failing casinos would be deployed to save the debt-ridden Australian operation.

The deal is outlined in a letter sent to Star Entertainment chair Anne Ward this morning, proposing “an alternative path” to the bailout finalised last Friday in which Star’s newly-opened Queen’s Wharf casino in Brisbane would be offloaded to Hong Kong-listed shareholders Chow Tai Fook Enterprises and Far East Consortium.

Bally’s boss Soo Kim said the company would “move quickly and enter into a binding agreement” to recapitalise Star.

Bally’s was offering at least $250m raised through an issue of convertible notes subordinated to Star’s principal lenders. The notes would be convertible into a minimum of 50.1 per cent of Star’s fully diluted ordinary shares, giving Bally’s control.

The American operator would underwrite the entirety of the capital offering and be supportive of providing Star’s existing shareholders the right to “participate in a significant portion” of the program on a pro rata basis, Mr Kim pledged.

“To be clear, we remain very open to discussing a larger transaction depending on our discussions with respect to Star’s liquidity and capital needs,” he wrote.

“We would also be happy to explore alternative structures that would similarly preserve value for all key constituents, including regulators, creditors, equity holders and employees.

“Our proposal is fully funded and not subject to any financing contingencies.”

Mr Kim said that as of 31 December, 2024, Bally’s had $US171m ($271m) in cash on hand and no drawdowns, other than letters of credit, on a $US620m ($983m) revolving credit facility.

“In short, we have ample unrestricted liquidity to complete this transaction expeditiously,” he wrote.

Importantly, Bally’s would partner with Star “in deploying our significant operating experience in turning around casino assets and growing highly successful casino businesses.”

Some 17 of Bally’s existing 19 casinos across 11 US states, including Nevada, had been revived under Bally’s control, industry sources say.

Mr Kim continued: “We are prepared to invest significant time and resources to work with the company to return Star to profitability and sustainability. We have retained experienced financial and legal advisers and are prepared to engage immediately.”

The move aims to up-end the deal struck last Friday with Hong Kong billionaire Henry Cheng’s Chow Tai Fook Enterprises and David Chiu’s Far East Consortium, also headquartered in the Chinese territory, to provide a lifeline of up to $50m to Star in a complex asset swap to save it from falling into administration.

Both companies are investors in the Queen’s Wharf project and major shareholders in Star. Under the proposed bailout, they would take control of the new $3.4bn casino, hotel and entertainment development on Brisbane River, subject to the approval of the Queensland government and regulators.

Senior executives from Chow Tai Fook were expected to fly into Brisbane by tomorrow to ink the agreement with Star chief executive Steve McCann, just days before the company was due to run out of cash. Star has debts of $400m and its shares have not traded since last Monday, March 3, because the company has been unable to sign off financial accounts.

Mr Kim said Bally’s strategy for Star was built on the “simple premise” that keeping in place the Australian operator’s current businesses, assets and platforms would “provide a stronger business over time”.

He told Ms Ward: “While we understand the rationale for Star’s recently announced transactions, we believe that our proposal offers Star and its stakeholders far greater value and operational flexibility, as well as the upside from retaining Star’s current projects and other assets.

“We have already completed substantial due diligence based on publicly available information and leveraging our understanding of the Australian gaming market and extensive experience in the international gaming sector.

“As a result, we are well positioned to work with Star in a focused manner to deliver a binding proposal within a short period of time.”

The Australian is seeking comment from Chow Tai Fook and Far East Consortium.