Bally's Takes a Swing at Star Entertainment
Gaming titan, Bally, joins the fray in the competitive bid for Star Entertainment control
In a last-ditch effort to secure a significant stake, Bally's Corporation, the American gambling behemoth, has tossed its hat into the ring for Star Entertainment. This unexpected maneuver comes hot on the heels of Star's announcement of a deal with its Hong Kong partners to prevent imminent collapse.
Bally's proposal seeks to snag a controlling stake for a minimum of AU$250m ($158m).
Amidst the chaos, Bally's has questioned the Hong Kong arrangement, presenting an alternative path.
Battle for Star's Remnants
Desperate for a lifeline, Star agreed to offload its 50% stake in Brisbane's Queen's Wharf integrated resort casino to Far East Consortium International and Chow Tai Fook Enterprises (CTFE) for AU$53m ($33.5m). The transaction kept Star from collapsing; the struggling company has been in search of a financial rescue deal since February.
Although the Hong Kong bid included a refinancing agreement that provides Star with AU$940m ($594m) in debt, Queensland regulators might have reservations about handing CTFE full control of the Brisbane IRC due to its historical links to convicted junket king Alvin Chau's Suncity Group.
Bally's "alternative path" offers an enticing opportunity for both Star and regulators, who might have raised red flags at the mention of Alvin Chau.
Bally's letter, penned by Soo Kim, extended a proposition for a Bally's-backed capital funding of $158m in exchange for 50.1% of Star's shares. Kim also expressed Bally's openness to discussing a larger transaction, depending on Star's capital needs. Kim concluded optimistically, asserting that Bally's long-term funding and operational expertise would be the best alternative for Star and its shareholders.
What's on the Horizon?
The ABC reported that the rescue deal offered by Hong Kong on Friday doesn't guarantee Star's survival. Omkar Joshi of Opal Capital Management expressed that Bally's intervention was welcome because it offers Star more options, potentially allowing the company to bypass the process of voluntary administration.
However, Joshi sounded a note of caution, suggesting that Star's executives would need to examine the business plans carefully and consider the potential for additional proposals to emerge. Reports indicate that while Star is looking at Bally's offer, there's no guarantee it will progress any further.
The Australian Securities Exchange has suspended trading in Star shares for over a week.
The unexpected move by Bally's Corporation offers Star Entertainment a potential alternative in the finance sector, providing a $158m investment in exchange for a majority stake. This new proposition could steer Star away from potential regulatory concerns associated with their Hong Kong partners, who have links to the Suncity Group.
As Star's executives evaluate the upcoming business plans, they must weigh the benefits of Bally's long-term funding and operational expertise against the possibility of further investing proposals in the industry.
