Summary
- Bally’s holds an optimistic view of the future for Star Entertainment Group, though it acknowledges a few reservations.
- The AU$300 million rescue package is contingent upon the group's continued solvency.
- Bally’s may abandon the deal due to a potential AU$400 million fine, referring to "changed circumstances."
Bally’s Corp has decided to assist Star Entertainment Group in overcoming its current challenges related to the company's performance, following a significant penalty issued by AUSTRAC.
Bally’s is confident in Star’s future, but a huge fine may change that
Bally's Corporation's assistance is based on certain facts, according to company Chairman Soo Kim. Recently, Star Entertainment's shareholders approved a joint rescue proposal from Bally's and Bruce Mathieson's Investment Holdings, amounting to AU$300 million (approximately $195 million). Following this approval, Inside Asia Gaming spoke with Kim about the company's future. During the conversation, Kim discussed significant issues, including the prospects of Star Entertainment's Brisbane property. He indicated the company would prefer not to sell the property but was noncommittal about future plans. Kim emphasized that Bally's involvement is based on the expectation that Star Entertainment will remain solvent. Bally's bailout and expertise are intended to guide Star toward recovery. Nevertheless, this support hinges on Star Entertainment avoiding financial penalties like the AU$450 million fine imposed on Crown Resorts in 2023 by AUSTRAC, Australia's financial watchdog. These remarks are significant, as early June reports revealed AUSTRAC is considering a fine against Star Entertainment due to alleged deficiencies in the group's anti-money laundering practices, particularly concerning Chinese junket operators.
AUSTRAC’s rumored fine could see Bally’s sound retreat
According to the Australian Financial Review, AUSTRAC may be seeking a fine of AU$400 million against Star Entertainment. Although this amount is less than what was imposed on the company's competitor in 2023, it could still create significant challenges for Star Entertainment. If Star Entertainment manages to navigate this difficult period, Bally’s might be able to address its issues, as Kim mentioned to Inside Asian Gaming. He noted that the challenges faced by one of its properties are similar to those faced by all three properties. “We are eager to get involved and convert our debt into equity to exert the influence we believe is necessary for the company to recover, Kim warned. However, there are situations where we might not be able to do so."
