Global casino-entertainment company, Bally’s has made a late bid to acquire a 50.1 per cent stake in Star Entertainment, while also saying it is “very open to discussing a larger transaction depending on discussions with respect to Star’s liquidity and capital needs”.
The Bally’s move comes after The Star entered into a binding heads of agreement with its Joint Venture Partners, Chow Tai Fook Enterprises Limited and Far East Consortium International Limited.
As part of that agreement The Star will dispose of its 50 per cent equity interest in Destination Brisbane Consortium (DBC) and has agreed to terminate the DBC Casino Management Agreement after a transitional period, subject to regulatory approval and other conditions.
Bally’s, however, said in its letter to The Star’s Board that it wanted to “propose an alternative path that we believe will benefit all of Star’s key stakeholders, including your regulators, creditors, shareholders and employees. In short, we firmly believe that our approach—as outlined in this letter—of new long-term capital plus operational track record will unlock the best alternative for Star and its shareholders.”
The key terms of the Bally’s proposal are:
- A capital raise of at least A$250m, pursuant to which Star would issue convertible notes subordinated to Star’s existing senior lenders. The convertible notes would be convertible into at least 50.1% of Star’s fully diluted ordinary shares.
- Bally’s would underwrite the entire amount of the capital raise, but would be supportive of providing Star’s existing shareholders the right participate in a significant portion of the offering on a pro rata basis.
- 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.
The letter added: “Our strategy for Star is built on the simple premise that keeping in place Star’s current businesses, assets and platforms will provide a stronger and more successful business over time.
“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.”
Bally’s owns and operates 19 casinos across 11 US states, along with a golf course in New York and a horse racetrack in Colorado, and holds OSB licenses in 13 jurisdictions across North America. In addition it has recently bought a casino in the UK and the Bally’s Interactive International division is a leading global interactive gaming operator with strong market shares in the United Kingdom and Spain.
The Star responded to the Bally’s proposal through a statement to the ASX, in which Chairman Anne Ward said: “The Board of The Star will review Bally’s Proposal. However, there is no certainty that it will be progressed.”