Billionaire Bruce Mathieson Backs Bally’s Proposal for Star Takeover

Star Entertainment's largest shareholder, billionaire Bruce Mathieson, has expressed support for the company’s takeover by American casino operator Bally’s Corporation. The offer stems from Star’s financial and regulatory challenges over the last two years.

According to local reports, Mr. Mathieson has pledged to invest an additional AU$50 million ($31.24 million) if the deal succeeds. The Australian pub and gaming baron has around 10% stake in Star. The new investment would double his shares and include board representation, factors that underline his commitment to the Rhode Island-based conglomerate.

A Bold Lifeline

Bally’s proposes injecting at least AU$250 million (US$158 million) into the troubled firm as convertible notes in exchange for an effective 50.1% controlling stake of Star. Bally’s chairman, Soo Kim, expressed confidence in the operator’s ability to flip the ailing casino group’s fortunes.

“It is not too late. Our proposal is not subject to due diligence or consents or anything. We can do this,” Kim explained, emphasizing that the group is more valuable as a whole than being sold in parts. “Every deal we’ve done, people say, ‘There’s no value there, or it is too hard,’ We are usually the buyer of last resort.”

The Alternative

Star has a separate deal on the table with private equity firm Salter Brothers and its Hong Kong partners, Far East Consortium and Chow Tai Fook Enterprises. The deal features a $750 million refinancing plan and Star’s sale of its stake in Queen’s Wharf. In return, the company will receive $53 million in cash and two Gold Coast properties.

The Australian firm has also received a $250 million bridge loan offer from King Street Capital Management. The US investment firm also plans a $60 million purchase of its Sydney conference center. However, the deal has yet to proceed due to Star’s reservations with mandatory payments to King Street, regardless of whether the loan is drawn.

Silence from Star

Star has yet to speak on the way forward, but a decision is expected soon, considering its dire financial state. The silence is mandated by an exclusivity agreement with its Hong Kong partners, who control a 50% stake in The Star Brisbane. The deal prevents Star from negotiating with other parties until March 25^th. When the time comes, the choice between Bally and other investors will be critical for Star's future in order to avoid financial insolvency.