US casino giant Bally’s Corporation offer $250m lifeline to rescue Star Entertainment

US casino group Bally’s Corporation is offering embattled Star Entertainment a $250 million lifeline that could rescue the gaming group from financial ruin.

The last-minute bid comes just days after debt-laden Star sealed a deal to sell a half share of its newly opened Brisbane casino at Queen’s Wharf to Hong Kong joint venture development partners Chow Tai Fook Enterprises and Far East Consortium for $53 million.

But Star on Monday said Bally’s had proposed injecting hundreds of millions of dollars into the company to preserve its “businesses, assets and platforms”, according to a letter sent to chair Anne Ward — potentially up-ending the sale of the casino.

Chow Tai Fook and Far East have already paid $35m.

Star also revealed on Friday that it had entered into an agreement with King Street Capital Management for a $250m short-term debt facility, and was in talks with another party to provide up to $940m of debt.

Bally’s said it was offering “an alternative pathway” and was “prepared to move quickly and enter into a binding agreement” with Star to provide at least $250m by the end of March through an issue of convertible notes subordinated to Star’s principal lenders. The notes would be convertible into a minimum of 50.1 per cent of Star’s fully diluted ordinary shares, giving Bally’s control.

“To be clear, we remain very open to discussing a larger transaction depending on our discussions with respect to Star’s liquidity and capital needs,” Bally’s chair Soo Kim wrote in the letter.

“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.

“Our proposal is fully funded and not subject to any financing contingencies.”

Bally’s owns and operates 19 casinos and resorts across 11 states in the US and is preparing to open one in Newcastle in the UK. It also has a golf course in New York and a horse racetrack in Colorado and has a global division with interest in lottery management and interactive gaming.

In a statement to the Australian Securities Exchange, Star said it had received the “unsolicited, non-binding proposal for additional funding” while noting the letter “does not include any details of other proposed terms and conditions” beyond the $250m injection.

“The board of The Star will review Bally’s proposal. However, there is no certainty that it will be progressed,” it said.

Mr Kim’s letter also offered to partner with Star “in deploying our significant operating experience in turning around casino assets and growing highly successful casino businesses.”

“We are prepared to invest significant time and resources to work with the company to return Star to profitability and sustainability. We have retained experienced financial and legal advisers and are prepared to engage immediately,” Mr Kim’s letter said.

“While we understand the rationale for Star’s recently announced transactions, we believe that our proposal offers Star and its stakeholders far greater value and operational flexibility, as well as the upside from retaining Star’s current projects and other assets.

“We have already completed substantial due diligence based on publicly available information and leveraging our understanding of the Australian gaming market and extensive experience in the international gaming sector.

“As a result, we are well positioned to work with Star in a focused manner to deliver a binding proposal within a short period of time.”

Star’s troubles started in October 2021, when it was reported the casino operator had enabled suspected money laundering, organised crime and fraud at its operations for years.

Since then, inquiries by local gaming regulators have found it unsuitable to operate its Sydney and Queensland casinos, placing them under government supervision.

Star now holds $400m in debt and at December 31 had only $79m cash at hand.

The offers from both its Hong Kong partners and Bally’s come just days before Star is expected to run out of money and fall into administration.

Star’s shares have been suspended from trade on the Australian Securities Exchange since last Monday after it failed to lodge its half-year results.

The company said it could not sign off on the accounts without a bailout.

Putting its share on hold last week, Star repeated a warning made early in February that without a rescue deal to pull in cash it may not be able to continue as a viable business.

Its shares later returned to trade and fell more than 17 per cent to 11¢, valuing the company at just $307 million.

How the chips fell for falling Star ...

June 26, 2024: Star brings in former Crown Resorts boss Steve McCann to steady the floundering ship. Chair Anne Ward says he “has the right credentials to lead The Star’s remediation program” after its image was tarnished amid accusations of money laundering, organised crime and fraud.

August 30, 2024: A damning NSW inquiry finds the gambling company is still unsuitable to hold a casino licence. It’s the second report on Star by Adam Bell SC, with the first finding it unsuitable to hold a casino licence because of serious regulatory failures in anti-money laundering and counter terrorism protections. The casino has continued to operate with an appointed manager.

September 2, 2024: The ASX suspends Star from trading after it failed to post its annual financial report amid claims it is seeking new funding from banks and investors. It comes just days after the staged opening of its new $3.6b Brisbane at Queen’s Wharf.

September 5, 2024: Star still assessing its financial liquidity as it prepares for a critical verdict from the casinos regulator on the future of its flagship Sydney operation.

September 13, 2024: The NSW Independent Casino Commission issues Star a show cause notice to explain why it should not face disciplinary action for the breaches found in Bell’s second inquiry.

September 26, 2024: Star secures a costly $200 million funding lifeline but warns it still faces a “significant” liquidity crisis. Its delayed full-year results show a statutory loss of $1.685b — a better performance from the previous year’s $2.44b loss — from revenue that fell 10 per cent. It flags hundreds of job losses and asset sales to find cash.

September 27, 2024: Star sheds half a billion dollars in market capitalisation on its return to trading following the previous day’s harrowing results.

October 17, 2024: Star hit with a $15m fine by the NSW Independent Casino Commission over breaches stemming from the latest Bell inquiry. Another extension of its existing Sydney licence suspension and independent manager’s appointment is aimed at protecting employment at the business.

November 28, 2024: Star warns it is facing a “critical” liquidity challenge as it tries to stem major revenue losses flowing from the introduction of mandatory carded play and cash limits. Cops first strike over executive pay at its AGM, which revealed an unaudited loss of $28m before interest, tax, depreciation and amortisation for the first four months of the year, including an $8m loss in October.

January 9, 2025: Star reveals it had only $79m in available cash at the end of December after burning through $70m since September. It says it is exploring “other liquidity solutions”.

January 13, 2025: Macau investor Xingchun Wang takes advantage of Star’s tumbling share price to lift his ownership stake from 5.52 per cent to 6.52 per cent. Queensland and NSW regulations prevent him from owning more than 10 per cent of the stock.

January 20, 2025: Star warns it is on the financial precipice after releasing new financial updates that show a 15 per cent slump in revenues and a $8m loss for the second quarter. It said attempts to find other financial solutions had so far failed to eventuate: “In the absence of one or more of those arrangements, there remains material uncertainty as to the group’s ability to continue as a going concern.”

January 29, 2025: Star raises $60m through the divestment of its Sydney event centre and other spaces within the flagship Star Sydney complex.

February 17, 2025: Oaktree Capital offers a five-year financial lifeline worth $650m. The proposal would require approval from the NSW and Queensland governments, and would still leave the company short of funds before the deal kicked in.

February 28, 2025: Star fails to lodge its half-year results, saying it cannot sign off on the accounts without a bailout.

March 3, 2025: Shares suspended from trade in the ASX. The stock is now worth just 17¢, valuing the company at $307m.

March 7, 2025: After days of speculation, Star reveals it has stuck a deal with the Hong Kong partners in the development of the Queen’s Wharf site to sell its half share of the Brisbane casino for $53m, with $35m to be paid immediately.

March 10, 2025: US casino giant Bally’s steps in with $250m lifeline. The board says it is reviewing the bid, which would give Bally’s 50.1 percent control of the group.