Star Entertainment urges shareholders to approve AU$300m rescue deal
The Star Entertainment Group's directors unanimously support a proposed funding package from Bally’s Corporation and Investment Holdings amid ongoing financial pressure, with a vote scheduled for 25 June.
Key points:
– Shareholders asked to approve AU$300m in strategic investments from Bally’s and Investment Holdings
– Bally’s may gain a controlling stake of over 50% in Star Entertainment if shareholder approval is granted
– Advisory firm Grant Samuel supports the deal but raises concerns over Bally’s debt load and limited Australian experience
The board of The Star Entertainment Group has unanimously recommended that shareholders approve a proposed AU$300m (US$180m) funding package, described as strategic investments, from US-based Bally’s Corporation and Australia’s Investment Holdings.
The backing comes amid prolonged financial difficulties for the casino operator, which owns flagship venues in Sydney and Brisbane.
In a notice filed with the Australian Securities Exchange, directors stated their support for the proposal “in the absence of a superior offer” and pending the opinion of an independent expert. That expert, Grant Samuel & Associates, said in a detailed report that non-associated shareholders would be “clearly better off if the transactions proceed than if they do not.”
The proposal involves the issuance of convertible notes and subordinated debt, with an initial AU$100m tranche already received in April, equally split between the two investors.
Good to know: If shareholders approve the full AU$300m plan at the upcoming general meeting on 25 June, Bally’s contribution would be reduced to AU$200m, while Investment Holdings would subscribe for AU$100m
The notes, if converted, would see both Bally’s and Investment Holdings gain more than 20% each in Star, with a combined share exceeding 50%. If Investment Holdings’ shareholders decline their portion, Bally’s could acquire a controlling 54% stake.
Grant Samuel noted Bally’s carries significant debt – over US$3bn – with major maturities not due until 2028. The advisory also highlighted Bally’s limited experience in the Australian gaming market and questioned its capacity to inject further capital if required, although it acknowledged the firm’s success in reviving struggling casinos in the US.
Star Entertainment continues to face significant financial strain. Earlier this year, the company disclosed it was unable to sign off on its half-year accounts due to a shrinking cash position. The rescue plan follows several failed funding attempts and the recent sale of its interest in the Queen’s Wharf Brisbane project.
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