Star Entertainment, once the shining jewel of Australia’s casino scene, has been stumbling around like a kangaroo after too many tinnies.
After months of financial chaos; think a refinancing deal with Salter Brothers collapsing faster than a house of cards in a cyclone; Star’s finally said “yep, we’re done” and accepted a AU$300 million lifeline from US operator Bally’s Corp. That’s £141 million, €164.3 million, or US$179.4 million for those playing currency bingo at home.
Bally’s, who’ve been sniffing around since February, lobbed their offer on 10 March, and with no other buyers in sight, Star’s board grabbed it like a lifeline at a shark-infested beach.
First up, Bally’s is chucking in AU$100 million by Wednesday; no shareholder vote needed, just a quick “cheers, mate” and it’s done. That cash turns into 15% of Star’s shares plus AU$66.6 million in debt that won’t budge. The rest, AU$200 million, comes later; pending approvals from shareholders and regulators, who’ll no doubt scrutinizse it like a dodgy meat pie at the servo.
Bally’s could end up with 56.7% of Star’s shares, way more than the 50.1% they first aimed for.
They’re paying 8 cents a share; cheaper than a snag at Bunnings; while Star’s stock’s been frozen at 11 cents for over a month. Why? They couldn’t even get their financial report in on time.
Talk about dropping the ball harder than a fielder in the Ashes.
Kim’s Big Dream: A Brighter Future or a Bally Big Gamble?
Bally’s chairman Soo Kim reckons this is a match made in heaven; or at least in a glitzy casino lounge. “This is our chance to turn Star back into Australia’s top gaming spot,” he said in a press release, probably while sipping a fancy cocktail.
“Star shareholders, you’re in for a ripper future with us.” Bally’s President George Papanier chimed in, sounding like a bloke ready to take on a croc with a butter knife: “We’re bringing our know-how Down Under, and we’re up for the challenge.”
Now, Bally’s isn’t new to the game; they’ve got 19 casinos across 11 US states and even snagged the old Aspers Casino in Newcastle, UK, late last year. But cracking the Aussie market? That’s like trying to herd cats on a surfboard.
Star’s been a mess; regulatory scandals (money laundering one of them), staff jumping ship, and fines bigger than a road train.
Still, Kim’s betting on his team’s magic touch to fix it. Good luck, mate; hope you’ve got more than a wing and a prayer.
Mathieson’s Wild Card: Cash or Chaos?
Enter Bruce Mathieson, Star’s biggest solo shareholder and a billionaire who’s made more dosh from pubs and pokies than you’ve had hot dinners.
He’s been pushing for this Bally’s deal like a bloke haggling at a garage sale. Back in the day, he offered AU$50 million, but now Star’s twisting his arm for up to AU$100 million.
If he coughs up, Bally’s scales back to AU$200 million, and the whole deal gets a bit of a shuffle; like a deck of cards at a dodgy poker night.
Mathieson’s sitting on 10% of Star’s shares and recently got the green light to buy more.
He’ll join Kim as a board observer, probably keeping an eye on things like a hawk at a barbie. The term sheet’s got more contingencies than a bushfire evacuation plan, so we’ll see if Brucey plays ball or chucks a spanner in the works.
Star’s Epic Fall: From Hero to Zero
Let’s rewind the tape. Star was once riding high; stock above AU$5 in the late 2010s, casinos buzzing like a summer arvo. Now? It’s a train wreck. Regulatory dramas have hit harder than a drop bear on a camper.
In NSW, Star Sydney’s been labeled “unsuitable” twice. Good luck with that while Bally’s is moving in. Over in Queensland, Star Gold Coast got the same “unsuitable” stamp in 2022, with a 90-day suspension delayed to. Both spots are under state watchdogs, and the feds at AUSTRAC are circling with a fine that could make your eyes water.
Then there’s Queen’s Wharf Brisbane; a glitzy multibillion-dollar dream Star bailed on last month, selling its 50% stake for AU$53 million to ditch debt. They kept full control of the Gold Coast joint, but Bally’s wasn’t thrilled. The term sheet barely mentions it, just a quick “yeah, we know you’re out” nod.
Star’s basically gone from a five-star feast to scraping the bottom of the barbie.
Bally’s Plate: Full as a Goog
Bally’s isn’t exactly chilling with a cold one either. They’re juggling more projects than a circus clown on a unicycle.
There’s a massive casino in Chicago (cheers to Gaming and Leisure Properties for the cash), a new resort on the old Tropicana site in Vegas, and a bid for a New York casino license in the Bronx. Oh, and they got bought out by Soo Kim’s hedge fund, Standard General, last year. Talk about a full dance card.
This Star takeover’s a bold move; some might say as risky as betting your house on a two-up toss.
Kim’s calling Star a “distressed asset with value,” like finding a ripper deal at the op shop.
At the NEXT Summit in NYC last month, he said: “It’s an operating issue, and we’ve fixed worse. Others gave up, but we’re keen as mustard.” Fair go, mate, but you’re stepping into a hornet’s nest Down Under.
So, what’s the vibe?
Star’s shareholders are set to vote in June, and the board’s all in; probably hoping this deal’s the golden ticket out of the muck.
But let’s not kid ourselves: this is like putting lipstick on a pig and calling it Miss Universe. Star’s got more baggage than a Qantas flight, and Bally’s is waltzing in like a yank tourist expecting to wrestle a croc on day one.
Here’s a bit of Aussie wisdom: “She’ll be right” only works if you’ve got a plan, not just a prayer.
Star’s licenses are hanging by a thread, and Bally’s has zero experience in Oz. It’s a bit like giving a city slicker a pair of thongs and a sheep station; good luck, cobber. Still, if they pull it off, it’ll be a yarn for the ages. If not? Well, at least we’ll get a bloody good laugh out of it.
Lessons from the Casino Jungle
This isn’t the first time a struggling casino’s been scooped up by a bold outsider. Take Caesars Entertainment’s 2020 merger with Eldorado Resorts; Eldorado, a smaller player, swallowed the giant for US$17.3 billion, turning heads in Vegas.
It worked, but they had US soil under their feet. Bally’s jumping oceans is a whole new level of bonkers.
Closer to home, Crown Resorts’ saga mirrors Star’s woes; fined AU$450 million by AUSTRAC in 2023 for money laundering breaches.
They got snapped up by Blackstone for AU$8.9 billion in 2022, proving distressed assets can still fetch a quid.
Bally’s AU$300 million punt on Star looks like a bargain-bin buy in comparison; hope they’ve got the chops to back it up.