The Star has also announced an agreement to dispose of its stake in Destination Brisban
Australia.- The Star Entertainment Group has announced that it has received an unsolicited, non-binding proposal for additional funding from Bally’s Corporation. The proposal includes a capital increase of at least AU$250m (US$157.8M), under which Bally’s would issue subordinated convertible bonds to Star’s existing senior lenders. These would allow for conversion into a minimum of 50.1 per cent of Star’s fully diluted ordinary shares.
Bally’s said it would underwrite the entire amount of the capital raise but would be supportive of providing Star’s existing shareholders the right to participate in a significant portion of the offering on a pro-rata basis.
Bally’s statement reads: “Our strategy for Star is built on the simple premise that keeping in place Star’s current businesses, assets and platforms will provide a stronger and more successful business over time. While we understand the rationale for Star’s recently announced transactions, we believe that our proposal offers Star and its stakeholders far greater value and operational flexibility, as well as the upside from retaining Star’s current projects and other assets.”
The Star said its board will consider the proposal but that there is no certainty it will proceed.
Bally’s Corporation owns and operates 19 casinos in 11 US states, along with a golf course in New York and a horse racetrack in Colorado. It holds OSB licenses in 13 jurisdictions across North America. It has acquired Aspers Casino in Newcastle, UK.
In a separate statement, The Star has announced it has entered into an agreement with joint venture partners, Chow Tai Fook Enterprises Limited (CTFE) and Far East Consortium International (FEC) under which it will dispose of its 50 per cent stake in Destination Brisbane, owner of The Star Brisbane integrated resort.
The terms of the agreement include the termination of the casino operator contributions to Destination Brisbane after March 31. In exchange, The Star will receive an upfront cash payment of AU$53m (US$33.4m).
The Star will no longer receive the operator fee under the Destination Brisbane casino management agreement. Instead, it will receive a fixed fee of AU$5m (US$3.2m) per month until June 30, 2026 and AU$6m per month thereafter. The company added that it may receive up to AU$225m (US$142m) in future consideration from an earn-out mechanism regarding The Star Brisbane.
The Star CEO Steve McCann said: “This transaction is an important milestone for the company and contributes to providing a potential pathway towards financial viability. Our team has worked hard to deliver The Star Brisbane and establish a new precinct for Brisbane. We are grateful for the efforts of all of our employees and we will work with our joint venture partners and the regulator to transition to a new casino operator in due course.
“We are excited about our future in the Gold Coast. We will have almost 1,200 hotel rooms at the Gold Coast following the opening of the 5-star Andaz Hotel in late 2025 and believe that once we optimise these operations and our strategy, our full ownership of these hotels will enhance our integrated offering and provide an opportunity to improve the performance of the business. The receipt of cash funding will provide additional support in the near-term as we focus on putting in place additional liquidity measures and seek to implement a whole of company refinancing.
“This transaction is a step in the right direction for The Star. There are still a number of challenges that we need to address, including progressing short and long-term liquidity for the Company. We remain focused on the remediation of the business and restoring our reputation as a suitable licensee at both The Star Gold Coast and The Star Sydney.
“While there is more to do to have access to the funding from the Bridge Facility and the Refinancing Proposal, these initiatives, together with the agreement to exit Destination Brisbane Consortium and expand our operations at the Gold Coast, improve our capacity to have a viable future, both for the company and its stakeholders. We are now focused on implementing these proposals, including continuing our engagement with Governments, regulators and existing lenders to seek their support for our plan. We also remain focused on implementing our plan to restore our licences.
