How I will save Star: casino operator Soo Kim speaks out about his 11th-hour bid to acquire struggling casino group.

Star’s would-be saviour Soo Kim learned to speak English while watching Sesame Street as the son of Korean migrants in New York City. Here’s how he plans to rescue the Star casino group.

US financier Soo Kim. Picture: Getty Images

The American financier who emerged as an unbidden “white knight” to rescue troubled casino operator Star Entertainment has pledged to keep the group ­together and withdraw a demand for tax relief from the Queensland and NSW governments.

Soo Kim, 50, is the son of ­Korean migrants who learned to speak English by watching ­Sesame Street as a five-year-old in an apartment in Queens in New York City.

On Monday, he launched an audacious, 11th-hour bid to pip a takeover of Star by its Chinese stakeholders and save the debt-stricken company from collapse.

Speaking exclusively to The Australian, Mr Kim insisted he could turn Star around without the lucrative “junket” business from highrolling Chinese gamblers that became a haven for corruption and money-laundering, creating a probity scandal that compounded the operator’s ­financial woes. Confirming he would not pursue the gaming tax holiday from Queensland and NSW sought by Star as it burned through its cash reserves – a gambit rejected by both state governments – Mr Kim said: “That’s just too presumptuous. Look, I think you have to get your house in order before asking … your constituents for anything. We want to tread lightly when it comes to the government. We want to tread lightly when it comes to the creditors. We’re not asking for huge concessions from labour.

“If … you can’t operate your business and you make it the problem with the government, what do you think their response is going to be? What you have to do first is … actually succeed and do the best you can. And then if … you need some evolutions or modifications to the regulatory structure you can explain your logic after you’ve done everything you can do.”

Mr Kim visited Star casinos in Sydney, Brisbane and the Gold Coast in February to get a first-hand read on the business, but did not speak to the management, board or regulators at that time.

His decision to pursue the $250m-plus bailout came on the heels of the deal announced last Friday for Hong Kong-based ­investors Chow Tai Fook Enterprises and Far East Consortium to take full control of Star.

This was the catalyst for him to intervene, offering not only to ­acquire a controlling interest in Star but to deploy the expertise of his company, Bally’s Corporation, in turning around struggling casinos. Bally’s operates 19 casinos in the US, as well as a digital gaming business internationally, and will soon open its first gaming house in Britain.

“We … didn’t know whether or not we would be dealing with Star in administration or outside of ­administration,” he said. “But we were prepared for each eventuality. What we didn’t see was that they would try to sell all their ­assets one at a time, outside of ­administration. That wasn’t something that we thought would be possible. When we saw the announcement last Friday, we said, ‘Hey, you know, this is a situation where we can just patiently wait for it to come to us’. We need to raise our hand and see if we can’t present our solution. It’s a viable alternative and we hope that Star will engage with us.”

The Star at Queens Wharf, Brisbane. Picture: David Clark

Asked if he would retain the existing three casinos in the group, Mr Kim said: “Oh, for sure. It’s indisputable that there’s more value to be instituted, to be preserved, by keeping it together. I’m pretty sure the systems are all linked so even just the disaggregation of management would be a challenge.

“From our perspective, we think the jurisdictions are different and the properties address different types of populations. There’s different competitive sets in each one. I think they’re all solvable problems and we’re going to solve them, it’s worth doing all of them.”

Star confirmed on Monday that it had received an “unsolicited, non-binding proposal” from Bally’s to invest. In an announcement to the stock exchange, the company said: “The board of The Star will review Bally’s proposal. However, there is no certainty that it will be progressed.”

Mr Kim’s plan is to recapitalise the business by raising at least $250m through an issue of convertible notes subordinated to Star’s principal lenders. The notes would be convertible to a minimum of 50.1 per cent of the company’s fully diluted ordinary shares.

Bally’s 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” on a pro rata basis – a move designed to allay concern that the value of their investments would be shredded.

Mr Kim said the offer was fully funded and not subject to any ­“financial contingencies”. As of December 31, Bally’s had $US171m cash in hand and no drawdowns, other than letters of credit, on a $US620m revolving line of credit. “In short, we have ample unrestricted liquidity to complete this transaction expeditiously,” he advised Star Entertainment chair Anne Ward.

The high-powered financial machinations over Star will gain more traction on Tuesday with the arrival in Brisbane of a delegation from Chow Tai Fook, Hong Kong billionaire Henry Cheng’s eclectic conglomerate of jewellery, property development, hotel, energy, telecommunication and port interests.

The team will press the Queensland government for changes to legislation covering the new $3.6bn Queen’s Wharf development anchored by the Star casino on the Brisbane CBD riverfront.

Chow Tai Fook and Hong Kong-listed Far East Consortium, a property development and investment group run by David Chiu, the son of the company’s late founder Deacon Chiu, each have a 25 per cent stake in the Queen’s Wharf complex and would inject $53m into Star through a complex asset swap with the embattled casino operator, in which they are also minority shareholders.

Mr Kim said Bally’s track ­record in turning around failing casinos – all but two properties in the 19-strong stable had been rescued – demonstrated that the company’s ability work with regulators and find solutions to problems that might deter others.

“Almost every casino we’ve bought or acquired has been through some sort of fire sale – liquidation, forced divestiture, bankruptcy cases,” he said. “And we fixed them all up. Almost every single one has done better under our watch than it was under whoever else’s it was. So if there is a ­casino in trouble, you could ­almost guarantee we would get a call. I’d been getting calls from various parties, banks and others, about Star for about a year or so.”

Mr Kim does not accept that the financial model for the casino business has been smashed in the fallout from the revelations of money laundering, corruption and the potential financing of terrorists associated with the highrolling junket trade.

That segment of the market was gone, he said, and not coming back after regulators imposed cash restrictions and card-only gaming in response to the breaches at Star and rival operator Crown. Bally’s was “completely aligned” with the changes, and in any case, had never relied on the junket market. “It’s not a zero-sum game,” he said. “What’s good for the regulator is not bad for us, and vice versa.”