Star Entertainment Receives Debt Financing Proposal from Oaktree Capital

The Star Entertainment Group Limited announced that it has received a debt financing proposal. The Australian operator has experienced significant financial struggles in the wake of regulatory hurdles and has been in a precarious position for a while.

Oaktree to Help Star Recover

As stated in an ASX filing, Star Entertainment has received a debt financing proposal from funds associated with Oaktree Capital Management. This proposal reportedly included a commitment letter and а term sheet outlining the terms under which Oaktree would lend its aid to the operator.  

If the proposal is approved, Oaktree will provide a total of AUD 650 million in two debt facilities with a term of 5 years.

Star Entertainment emphasized that the proposal is subject to numerous conditions. These include a comprehensive security package and intercreditor documentation which would require consent from regulatory bodies in both Queensland and New South Wales. In addition to that, Star would have to complete due diligence in relation to the proposal and execute long-form financing documentation.

The proposal would also rely on existing SFA lenders entering a settlement and/or financing agreement on terms satisfactory to Oaktree.

The proposal, however, is not conditional on The Star raising subordinated capital nor any waiver or deferral of tax payable to Australian state governments.

No Definitive Deal Has Been Signed Yet

Star Entertainment said that its board of directors will consider Oaktree Capital Management’s proposal. It emphasized that there is “no certainty” that this proposal will be progressed or implemented and whether the company would be able to satisfy its conditions, if interested.

Should Star Entertainment proceed with the proposal though, the company will require additional funding for the period prior to the proposal’s implementation.

In its ASX release, Star Entertainment said that it is still exploring possible liquidity solutions. The company warned that there is no guarantee that any of the talks will yield results.  

While discussions continue with respect to a range of different solutions, there is no certainty that any of these discussions or negotiations will result in one or more definitive arrangements that might materially increase the Group’s liquidity position.

Star Entertainment statement

A Difficult Time for the Company

The negotiations with Oaktree come at a difficult time for the Australian gaming company. The operator recently reported “limited” opportunities to raise funding in the absence of liquidity solutions.

Investors did not take this news very well, causing a decline in the company stock. While Star Entertainment’s share price has experienced a slight rebound in the past few days, the company still has many challenges ahead.

If it fails to reach liquidity agreements with Oaktree and other interested parties, the company’s financial position will remain in peril.