Summary
- The largest shareholder of Star fully supports Bally's acquisition of a controlling stake worth AU$250 million.
- Bruce Mathieson currently owns a 10% stake in Star and is planning to increase his holdings to 20%.
- Star has received proposals from other companies to invest in its assets and provide liquidity.
Struggling Australian gaming giant Star Entertainment Group is likely nearing acceptance of a funding offer from Bally’s Corporation, proposed earlier in March, after its largest shareholder expressed approval of the deal.
Star faces mounting pressure to sell vital stakes to move past its current predicament
Bally’s Corporation has proposed a bid of AU$250 million (approximately $160 million) to acquire a 50.1% controlling interest in the company, aiming to assist the group in overcoming its financial and regulatory challenges. Bally’s is optimistic that the Star Entertainment Group can return to normal operations and boasts the necessary assets to excel in the Australian casino market. This sentiment is echoed by Bally’s Chairman, Soo Kim, who reiterated these views in several recent interviews. “It is not too late. Our proposal is not contingent on due diligence or consent. We can proceed. Every deal we’ve engaged in has been deemed undervalued or overly complex. We often act as the buyer of last resort,” Kim told the Australian Financial Review, asserting that Bally’s Corp is uniquely positioned to support Star Entertainment Group through this challenging period. Kim reaffirmed Bally’s initial pledge from early March, stating that the company sees a path forward that revitalizes Star Entertainment Group’s assets while safeguarding shareholder value, which is a crucial factor in considering any acquisition that places the group under new control. Additionally, Bruce Mathieson, a businessman with investments in pubs and poker machines who holds a 10% stake in Star Entertainment Group, has expressed his willingness to accept the offer. He also mentioned his intention to invest an additional AU$50 million ($31 million) to increase his stake in the group to 20%.
The company’s largest shareholder is looking to get bigger
Mathieson has received regulatory approval to increase its stake to 20% in the group, potentially making it easier for Star to propose relinquishing a controlling stake to Bally’s Corporation to its Board and shareholders. Star has been facing financial challenges, exploring potential deals with two major partners, Chow Tai Fook and Far East Consortium, both based in Hong Kong. These companies are considering purchasing Star’s 50% share in The Star Brisbane property, which opened last August, aiming to strengthen their position in the Australian casino market while providing Star with much-needed funds during this tough time. When Star received Bally’s proposal in early March, the board announced it was reviewing the offer but remained uncertain about proceeding with it. In February, Oaktree Capital Management proposed refinancing Star Entertainment's AU$650 million debt, offering the company additional time to manage its current challenges.
