Australian Financial Rev: Bally Ponders Money for Star Entertainment
Star Entertainment Group, one of Australia’s biggest casino owners, is facing tough financial times.But that could be remedied if Bally Corporation puts money into the company.
Bally Corp. may invest in Star Entertainment Group, per report.
Key Facts:
- Star Entertainment Group has fallen on hard times, but a partnership with a gaming company may help
- American-based Bally Corporation has reportedly met with Star Entertainment to discuss a potential investment
- Other gaming companies have targeted Star Entertainment for possible financial collaboration as well
Bally Corporation is reportedly exploring the possibility of investing in Star Entertainment Group, a struggling Australian casino operator. According to the Australian Financial Review, Bally’s representatives recently traveled to Australia for discussions with Star Entertainment’s leadership, lenders, and key stakeholders. Leading Bally’s delegation was Chairman Soo Kim.
A Strategic Move for Bally?
The Bally contingency reportedly visited Star Entertainment’s major casino properties in Sydney, Brisbane, and the Gold Coast.
While Star has faced significant financial challenges, an investment from Bally might not be surprising. The US-based gaming company is reportedly flush with cash from a recent merger of its own.
Bally itself was recently acquired by Standard General, a firm known for revitalizing distressed businesses. With Standard General’s backing and Bally’s industry expertise, a strategic investment in Star could be part of a broader plan to turn the Australian company’s fortunes around.
The Australian casino market has flattened recently, delivering a blow to Star Entertainment and its competitors.
Still, Star’s properties have tremendous value and upside. An infusion of cash could quickly transform the company from teetering to stable.
For Star Entertainment, which has struggled despite various financial and operational restructuring attempts, fresh backing from an industry player like Bally could provide much-needed stability. Insiders are monitoring the possible merger or acquisition.
Bally Corp. has not publicly discussed a desire to acquire Star Entertainment Group, but there are other paths it could take. Bally could simply purchase shares of the Australian gaming giant at a good price or supply a line of credit in exchange for shares of common or preferred stock.
Star Entertainment Group stock is trading at 0.13 AUD as of February 25. The stock is down 71.9% over the past 12 months.
More Players in the Mix
Bally isn’t the only entity monitoring Star Entertainment’s situation. Other major investment groups have also expressed interest, with some considering debt financing while others weigh a possible buyout.
Blackstone, the global investment firm, is rumored to be assessing whether Star presents a worthwhile acquisition opportunity at a reduced price. Meanwhile, Oaktree Capital has proposed to lend Star AUD 650 million through two structured debt facilities with a five-year term—though the deal comes with several conditions.
Additionally, Cerberus Capital Management has been looking into acquiring portions of Star’s existing debt.
Star’s Ongoing Financial Struggles
Despite implementing remediation plans, Star’s recovery has been slow and ineffective. Cash reserves are reportedly dwindling, prompting the company to explore various fundraising strategies. Recently, it has resorted to selling non-core assets to secure liquidity.
Star Entertainment’s troubles stem from regulatory failures that significantly impact its financial health. Authorities found severe compliance lapses within the company, including allegations of facilitating money laundering through unauthorized high-roller transactions. These violations led to substantial penalties and ongoing regulatory scrutiny.
As Star navigates this turbulent period, potential investments or financial lifelines from Bally or other interested firms could determine its future trajectory. Whether Bally moves forward with an official bid or another player steps in remains to be seen.
