【stake mines calculator】Star Entertainment in crisis as refinancing deal falls apart

The failure to reach an agreement, which the company reported via a filing with the Australian Securities Exchange, has left the company with dwindling cash reserves and an urgent need for a financial lifeline to avert potential insolvency.​

The proposed refinancing arrangement with Salter Brothers Capital, which could have provided up to A$940m, fell through due to unmet conditions necessary to address Star’s immediate liquidity needs.

Specifically, the operator said that “lender requirements for specific priority arrangements and enforcement rights in relation to their proposed security over non-gaming assets of The Star could not be met.”

This development has exacerbated Star’s financial instability, with reports indicating that the company has sufficient cash reserves to sustain operations for only about a week.

Star’s management has been working on a comprehensive financial recovery strategy to stabilise the company’s finances. The plan consists of multiple elements aimed at securing both short-term liquidity and long-term stability. 

One of the components was the deal with Salter Brothers.

Another is the sale of Star’s 50% stake in the Queen’s Wharf project in Brisbane to its partners in the project. This transaction is already in progress. 

In addition, Star is negotiating a A$250m bridge loan arranged through King Street Capital Management.

The company announced on 7 March that it had formalised the agreement for this short-term debt facility, but no further updates have been provided.

Access to these funds is subject to certain conditions, and the loan remains available for withdrawal until 29 April.

To address immediate liquidity concerns, Star is also exploring various short-term funding options.

These alternatives are necessary because neither the bridge loan nor the long-term financing agreement would provide immediate access to the amount of capital required to stabilise the company in the short term.

Bally’s deal becomes more palatable

In response to Star’s precarious position, Bally’s Corporation has extended an unsolicited proposal to inject at least A$250m into Star.

This capital infusion would be in exchange for a controlling 50.1% stake in the company.

Bally’s chairman Soo Kim has expressed confidence in the firm’s ability to finalise the deal swiftly, emphasising the potential for a mutually beneficial arrangement.​

The proposed deal would give Bally’s with a controlling interest in Star, but is seen as a potential lifeline for the cash-strapped operator, offering much-needed liquidity and operational support.

In February, Oaktree Capital offered to refinance A$650m of Star’s debt. However, no deal has materialised.

Complicating matters, Star is under intense regulatory scrutiny due to findings of money laundering activities within its high roller operations.

The New South Wales Independent Casino Commission has imposed a A$100m fine and suspended Star’s licence, mandating comprehensive remediation efforts over the next six months.

These regulatory challenges have further strained the company’s financial position and market confidence.​

Major Star shareholder Bruce Mathieson has characterised the refinancing efforts as particularly challenging, citing the complex regulatory environment of the casino industry.

He offered A$50m in support of the Bally’s deal, highlighting the critical nature of securing immediate financial backing.​

Star’s board is currently evaluating Bally’s proposal alongside other potential solutions to address its liquidity crisis.

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