Bally’s Steps in with AU$250M Offer to Help Star Entertainment

Shortly after announcing an agreement to sell half of the shares of its recently opened Brisbane casino at Queens’ Wharf, Australia’s troubled casino and entertainment operator, Star Entertainment, announced it has received a cash injection proposal from Bally’s Corporation.

Bally’s Corporation Proposes an Alternative Path That May Benefit The Star

Late last month, the former company’s shares dipped amid financial and trading woes. At the time, The Star announced that it wasn’t able to release its six months results for the period ended December 31, 2024, unless it receives a cash injection. The hurdle saw The Star’s shares temporarily suspended from trading on the Australian Securities Exchange (ASX). This happened after the company failed to disclose its latest financial report.

However, as noted, Bally’s may ultimately help The Star recover from its troubles. An ASX announcement released by the latter company confirms it has received an “unsolicited, non-binding proposal for additional funding,” referred to as “Bally’s Proposal.” Notably, the proposal seeks to grant The Star AU$250 million ($158 million). Bally’s letter was signed by the company’s chairman, Soo Kim, who recognized the proposal may serve as an “alternative path” that may ultimately benefit The Star’s stakeholders, shareholders, employees, creditors, as well as regulators.

Describing Bally’s Proposal, The Star said that it offers to provide “a capital raise of at least AU$250 million, pursuant to which The Star would issue convertible notes subordinated to The Star’s existing senior lenders.” The offer further reads: “The convertible notes would be convertible into at least 50.1% of The Star’s fully diluted ordinary shares. 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 Proposal Aims for Long-Term Growth and Retaining The Star’s Assets

Bally’s chairman explained that the company makes this proposal in light of its confidence and ability in operating in different markets. “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 advisors and are prepared to engage immediately,” Kim wrote.

Describing its strategy, Bally’s explained that it seeks to preserve The Star’s resources, operations and assets. At the same time, the former company seeks to foster sustained growth and long-term success for The Star.

The chairman of the leading gaming and hospitality company that operates nearly two dozen hotel and casino resorts across the US also wrote: “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.”

Per the letter, Bally’s has already completed due diligence that is based on publicly available information. Kim wrote that this puts the company in a good position to collaborate with The Star and ink a binding agreement “within a short period of time.”

The Star confirmed that it will review the proposal tabled by Bally’s Corporation. Still, the company said that there’s no certainty that it will accept the tabled proposal for additional funding.