Bally’s offer backed
Australia’s Star Entertainment Group has been in trouble for some time. The casino giant has faced multiple government enquiries into its processes over the past two years, resulting in substantial fines and the removal of its Sydney casino license in 2022. Now though, the company may have a lifeline.
Bally’s Corporation made an unsolicited approach for a controlling stake in Star earlier this month. News has broken this week that the largest single shareholder of Star has backed that deal, which would see Bally’s add AU$250m (US$158m) in funding in return for a 50.1% stake in the company.
will add an additional AU$50m (US$31.5m) to the pot to make sure that the deal goes ahead
Bruce Mathieson, a pubs and slot machine mogul, currently holds around 10% of Star’s capital. He has supposedly claimed he will add an additional AU$50m (US$31.5m) to the pot to make sure that the deal goes ahead. If Star approves then Mathieson will increase his stake to 20% and secure a boardroom seat.
Keeping it together
Star has been seeking a deal to solve its financial woes since February this year. Oaktree Capital Management offered the company AU$650m (US$414m) to keep the company afloat that same month. To accept that offer, Star would still require approval from the Queensland and New South Wales governments.
Earlier this month, Star confirmed that it had already accepted an offer from Hong Kong-based Chow Tai Fook and Far East Consortium. Both of the Hong Kong firms hold a 25% stake in Star’s Brisbane-based casino The Star Brisbane. They offered to buyout the remaining 50% stake to take full control of the property.
We look forward to working with Bruce to reinvigorate these great assets”
That offer came days before Bally’s threw its hat into the ring. Bally’s Chairman Soo Kim believes Star offers a lot of potential as an existing company, without selling off its casinos separately. “We have said from the beginning that our plan is the best way to preserves shareholder value,” he said. “We look forward to working with Bruce to reinvigorate these great assets.”
A viable future
Speaking earlier this month, Star Chief Executive Steve McCann said that the Brisbane property deal and Oaktree loan had provided his company with the “capacity to have a viable future.” However, the company has confirmed that it is still considering several offers, now including the Bally’s deal.
Bally’s itself was purchased by its top investor in a $4.6bn deal just last year. Standard General previously owned a 23% stake in the firm before agreeing to pay $18.25 per share in cash for the remaining shares, a premium of about 35% of the company’s closing price at the time. Shares jumped 26% after the deal was confirmed.