Star Entertainment Shareholders Approve Bally's-Backed Rescue
Shareholders of Star Entertainment have approved a critical AUD300 million (US$195 million) rescue package, ensuring the financially troubled Australian casino operator can continue operating. The decision was made during a shareholder meeting held in Sydney on Wednesday, with more than 98% of proxy votes cast in favor of the proposal, according to slides presented during the live-streamed event.
LISTEN TO THIS ARTICLE:The recapitalization package, designed to address Star's ongoing financial and regulatory challenges, is being led by Bally's Corporation. The US-based gaming company is working in partnership with the Mathieson family, which is already Star's largest shareholder.
Related: Bally's Expect Major Review of Star Operations to Proceed with TakeoverThe capital raising is structured through multi-tranche convertible notes and subordinated debt instruments, which upon conversion will result in Bally's and the Mathieson family holding approximately 56% of Star's issued capital. This ownership stake will give the two parties a controlling interest in the company and is expected to stabilize the group's financial position in the near term. The final tally of votes is expected to be confirmed later in the day, but the strong backing from shareholders underscores the urgency of the situation and the limited options available to the company.
Star Entertainment, Australia's second-largest casino operator after Blackstone-owned Crown Resorts, has faced mounting pressures over the past two years. The company is dealing with regulatory inquiries and a substantial debt burden that has threatened its ability to operate.
The vote outcome provides a temporary lifeline for Star, allowing it to avoid the prospect of voluntary administration. Bally's Corporation has applied to relevant regulatory bodies in New South Wales and Queensland for approval to operate casinos, which will be a crucial step in the completion of the transaction and the implementation of the recovery strategy.
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Bally's Ready for the Next Phase
Bally's chairman, Soo Kim, expressed the company's eagerness to proceed once the necessary regulatory reviews are finalized. He noted the importance of moving quickly to place Star on a stable financial and operational footing. Bally's involvement signals a significant international commitment to restoring confidence in Star's operations, which have been marred by allegations of misconduct and compliance failures in recent years.
Star chairman Anne Ward emphasized the lack of alternative funding sources, stating that the Bally's-led proposal was the only viable solution after earlier expressions of interest from Oaktree Capital and Salter Brothers failed to materialize. She highlighted that the strategic investment from Bally's and the Mathieson family not only provides immediate liquidity but also supports Star's ability to continue as a going concern.
According to Ward, the funding package helps the company avoid outcomes such as voluntary administration, which would not serve the best interests of shareholders.
In March, Star announced the partial sale of its Queen's Wharf development in Brisbane, a project valued at AUD3.6 billion (US$4.17 billion), in a deal worth only AUD53 million (US$61 million). The buyers are Hong Kong-based firms Far East Consortium International and Chow Tai Fook Enterprises, which were already partners in the Queen's Wharf project.
In addition to this sale, Star has also divested a theatre connected to its flagship casino property in Sydney, further underscoring the company's efforts to reduce debt and streamline operations. These asset sales form part of a broader strategy to bolster liquidity while navigating complex regulatory and financial landscapes.
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