Bally’s Makes $157 Million Bid for Majority Stake in Star Entertainment

Star Entertainment is considering a second deal that could allow for fresh capital to flow into the cash-strapped company, as Bally’s has proposed offering a minimum of A$250 million ($157 million) in exchange for a majority stake in the Australian casino firm. 

Star confirmed that the offer was on the table Monday after media reports of the potential bailout were publicized in Australia. 

Star Continues Searching for Long-Term Cash Stability

The offer comes just days after Star agreed to a deal with its Hong Kong Partners, Chow Tai Fook Enterprises and Far East Consortium Enterprises, in which it would sell its 50 percent stake in its Brisbane casino for A$53 million ($33.4 million) in cash, a deal that also would have given star complete control of the Star Gold Coast casino complex. 

An agreement to sell the majority of the company to Bally’s, which would receive notes convertible into at least a 50.1 percent stake in Star under the proposal, would necessarily mean that the financial moves with the Hong Kong partners would have to be walked back.

Star said that its board was planning to review the Bally’s offer, but that “there is no certainty that it will be progressed,” according to a report by Yahoo! Finance.

Star also announced Friday that it had made an agreement with King Street Capital Management to secure an A$250 million ($157 million) short-term debt facility, a bridge loan that would alleviate the immediate cash crunch the company was feeling last week. 

Bally’s submitted its proposal both to the Star board and the Australian Securities Exchange, and indicated that it was open to negotiating the proposal as well.

“We would also be happy to explore alternative structures that would similarly preserve value for all key constituents, including regulators, creditors, equity holders and employees,” Bally’s wrote.

Bally’s Cites Improved Finances in Star Offer

The offer comes despite a recent period of financial uncertainty for Bally’s itself. The casino firm ended 2023 with $3.6 billion in debt, and investors warned last year that a planned takeover by Bally’s chairman Soo Kim could make those issues even worse. 

That debt load seemed to be making it difficult for Bally’s to find necessary financing for its planned Bally’s Chicago casino. However, the company was able to secure $940 million in new funding from Pennsylvania rest estate investment trust Gaming and Leisure Properties last July, more than enough to complete the Chicago project.

In making its bid for a Star Entertainment takeover, Bally’s pointed out that it had $171 million in cash on hand and a $620 million revolving credit facility, enough to ensure it could quickly fund its offer.

Star Entertainment has been struggling in the wake of regulatory compliance scandals that have plagued the company in recent years. The NSW Independent Casino Commission (NICC) found the company unsuitable to hold a casino license due to its failure to adhere to counter-terrorism and anti-money laundering regulations in 2022, and a 2024 inquiry revealed that Star officials were looking for a way to get rid of Nicholas Weeks, who the NICC appointed to oversee operations at The Star Sydney. 

The net result of these scandals was the almost complete devaluation of Star Entertainment, which saw its market capitalization fall from a high of nearly $A4 billion ($2.52 billion) in 2021 to about A$316 million ($199.4 million) last week.

(Image: courtesy of Star Casino)