The Star Entertainment urges shareholders to sanction Bally's proposal
The Star Entertainment Group is set to undergo a significant change, with Bally's Corporation poised to take control of the Australian casino operator. The proposed takeover, valued at approximately AU$300 million (US$195 million), aims to provide The Star Entertainment with much-needed funding and help it recover from regulatory trouble in its home market.
Bally's Corporation has asked The Star Entertainment's board of directors to review the company's strategic, financial, and commercial operations, with the purpose of turning around The Star's overall performance. This includes stabilizing the operations across all Star casino assets, with special attention to managing the Brisbane casino. Bally's leadership sees the need to tackle common challenges faced across Star's properties and is committed to improving management irrespective of ownership changes.
As part of the financial restructuring and investment, The Star has issued AU$200 million in convertible notes with a 9% annual interest rate. If approved, 278,517,860 convertible notes will be issued to Bally's Corporation, and 139,258,930 convertible notes will be issued to Investment Holdings. Upon conversion of these notes, Bally's Corporation will gain a 56% ownership stake in The Star Entertainment, effectively granting Bally's majority control of the company, subject to regulatory approvals in New South Wales and Queensland.
The review by The Star Entertainment's board of directors is outlined in an explanatory memorandum provided by Bally's Corporation. The directors of The Star Entertainment unanimously recommend that shareholders vote in favor of the Strategic Investments Resolutions and the Placement Capacity Refresh Resolutions at the General Meeting, scheduled for June 25, 2025. At the General Meeting, shareholders will be asked to consider Bally's Corporation's proposed takeover.
The proposed takeover is contingent on navigating regulatory hurdles, including probity investigations concerning Bally's suitability to hold gaming licenses in Australia. The negotiations between The Star Entertainment Group and Salter Brothers Capital fell through in early April. Bally's Corporation remains confident that it can implement a turnaround that preserves The Star Entertainment Group's long-term potential.
In addition, The Star has secured a last-minute extension with Hong Kong partners involving the Queen’s Wharf Brisbane development, temporarily averting the collapse of that $3.6 billion project, which Bally's had hoped to keep intact as part of its broader strategy to revive Star's fortunes.
In summary, the key details of The Star Entertainment Group's proposed takeover by Bally's Corporation are as follows:
- Investment Amount: AU$300 million (approx. US$195 million)
- Convertible Notes Issued: AU$200 million, 9% annual interest
- Bally's Ownership Stake Post-Takeover: Approximately 56% after notes conversion
- Purpose of Operations Review: Stabilize and turn around Star casinos, especially Brisbane, by addressing common operational challenges and governance issues
- Regulatory Conditions: Pending approvals and probity investigations in Australia
Bally's Corporation aims to review and improve The Star Entertainment's business operations, focusing on stabilizing and turning around its performance, particularly at the Brisbane casino, as part of a strategic investment involving the issuance of AU$200 million in convertible notes with a 9% annual interest rate. If approved, this investment will give Bally's a 56% ownership stake in The Star Entertainment, subject to regulatory approvals in Australia.
