Australia’s troubled casino operator Star Entertainment Group is once again under scrutiny as U.S.-based Bally’s Corporation moves ahead with its plan to take control of the company.
While shareholders have approved a much-needed AU$300 million (US$195 million) lifeline from Bally’s and Bruce Mathieson’s Investment Holdings, the deal is now facing a regulatory roadblock.
Bally’s to “Provide Clear and Convincing” License-Worthy Evidence
The New South Wales Independent Casino Commission (NICC), led by chairman Philip Crawford, isn’t yet convinced the rescue plan is the right path forward.
According to a report from the Australian Financial Review, the regulator continues to harbor doubts regarding the Star’s leadership and overall direction. The concerns date back before the company’s management overhaul began.
Over the past year, Star has attempted to rebuild credibility, appointing Steve McCann as group chief executive manager and managing director and installing new leadership at its Sydney property. However, those efforts may not be enough to ease the regulator’s concerns.
“Bally’s Corporation must provide clear and convincing evidence it is suitable to be associated with a casino license,” Crawford told the AFR.
“The [commission] will examine Star’s financial circumstances and ask Bally’s to outline its future plans for the Star, including any changes in leadership and plans for the financial management of the business.”
The NICC is reportedly waiting on AUSTRAC’s determination of a financial penalty of AU$400 million ($260 million) related to Star’s historical breaches of anti-money laundering laws before moving forward. That delay could prove costly for Star, which is already grappling with significant financial instability.
Kim, Ready to Initiate Financial Due Diligence
Bally’s, under the direction of chairman Soo Kim, wants to begin financial due diligence immediately, though the timing of regulatory approval remains uncertain.
Meanwhile, Star is juggling negotiations on another front. Talks are underway with Hong Kong-based Chow Tai Fook and Far East Consortium about selling off its 50% interest in The Star Brisbane.
The deal would see Star hand over its debt tied to the Brisbane development and receive AU$57 million (US$37 million) in return. As part of the arrangement, Star would also gain its partners’ stakes in two Gold Coast towers at The Star’s beachfront resort.