Star Entertainment accepts $300m buyout offer from Bally's Corp
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The news: The Star Entertainment Group has accepted a $300 million rescue package from Bally’s Corporation, that will see the embattled entertainment group hand over control to the US group.
The numbers: The $300 million deal will see Bally’s issue convertible notes at a conversion price of 8 cents per share, equating to a 56.7% stake in Star. The entertainment group will receive the first $100 million tranche by Wednesday, with the remaining $200 million to be paid following a shareholder vote and regulatory approvals.
If a $100 million investment from Bruce Mathieson (the Star’s largest shareholder) goes ahead, Bally’s investment would reduce to $200 million.
The context: The Star's board said it intends to unanimously recommend that The Star shareholders vote in favour of the transaction, in the absence of a superior proposal.
Star first confirmed reports of the unsolicited, non-binding proposal for additional funding from US casino giant Bally’s in early March, in which Bally’s had reportedly offered a capital raise of at least $250 million.
The embattled group has been under extreme financial pressure as it manages ongoing regulatory probes and a collapse in revenue. Star's shares have been suspended from trading since 3 March after the embattled casino operator failed to lodge its half-year financial report. The group said it would not be able to lodge the report until it secured commitments to refinance its existing corporate debt and provide additional liquidity.
Last week, Star Entertainment confirmed that property funds manager Salter Brothers Capital had withdrawn its $940 million refinancing proposal, noting that the move followed "extensive engagement" with Salter Brothers, as well as with relevant third parties including state governments and regulators.
The company concluded it was unlikely that "a number of conditions" relating to the proposal could be met.
In February, Star received a debt financing proposal from funds associated with US asset manager Oaktree Capital Management, including a commitment letter and term sheet for $650 million across two debt facilities.
The sources: Star Entertainment announcement, The Australian
