Bally’s Makes AU$250 Million Offer for 50.1% Stake in Star Entertainment

US casino conglomerate Bally’s Corporation has offered Star Entertainment an AU$250 million (US$158 million) recapitalization package. This comes just days after the Australian casino operator received a US$53 million financial lifeline from Hong Kong investors.

With the new bid, announced in a letter shared with the Australian Securities Exchange (ASX), Bally’s aims to acquire a 50.1% stake in Star to help the troubled casino operator restructure and stabilize its operations. The company seeks to explore structures that maintain the operator’s key constituents. Bally’s Chairman Soo Kim emphasized these intentions: “Our approach is founded on the principle that Star’s existing operational framework will yield greater success and stability.”

A Strategic Proposal

Bally’s pledges to underwrite the capital initiative for convertible notes that would be changed into at least 50.1% of Star’s fully diluted ordinary shares; this would grant it a controlling stake of the operator. The company believes long-term financial support would revitalize Star’s struggling gaming operations and offer a sustainable recovery plan.

While Bally would be the majority shareholder of Star Entertainment with 50.1% shares, the company expressed a willingness to renegotiate for more. In the letter, Bally’s stated, “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 proposal is described as an alternative option to the recent deal with Chow Tai Fook Enterprises and Far East Consortium that would grant the companies a 50% stake in the Queen’s Wharf development.

Potential Relief for Star

Star Entertainment has been battling financial challenges due to endemic regulatory issues. To avoid insolvency, the casino operator has conducted several financial restructurings, such as the sale of The Treasury Brisbane and Sydney Event Center. The suspension of its trade on the ASX reflects its continued struggle to stabilize operations.

Bally’s takeover bid is the first in a while that offers Star a recovery strategy beyond instant liquidity relief. The company provides capital to restructure operations across Gold Coast, Sydney, and Brisbane. It also remains ready to engage and involve Star’s current shareholders in drafting structural alternatives on a pro-rata basis.

Impact on the Market

With Star’s financial health dwindling fast, there is cautious optimism for positive results from Bally’s potential control of the company. Beyond setting Star on a profitable course, the deal could shift the dynamics of future investments by international operators in the Australian gambling industry.