The prospective buyer looking at the embattled Star Entertainment Group is “well known for picking up casinos that are distressed” and turning them around as the embattled casino operator considers a takeover bid.
American gambling, betting and entertainment company Bally’s Corporation has lobbed a $250m bid for a 50.1 per cent stake in Star just days after it announced the sale of its ownership in its Brisbane casino.
Star signed a $53m deal with Hong Kong investor Far East Consortium and Chow Tai Fook for its 50 per cent stake in the Queen’s Wharf precinct, but Bally’s has swooped in with an “alternative path” for the company.
Andrew W Scott, CEO at Inside Asian Gaming who spoke with Bally’s boss Soo Kim just weeks ago, said this kind of offer was typical from the US giant.
“Bally’s is basically seeing an opportunity here,” Mr Scott told Business Now.
“They’re well-known for picking up casinos that are distressed.”
Bally’s owns and operates 19 casinos in the US and said it would help Star by deploying its “significant operating experience in turning around casino assets and growing highly successful casino businesses”.
About 17 of Bally’s casinos have been revived under the US company’s watch, industry sources told The Australian, which first reported on the $250m offer to Star.
“They formerly were interested in Japan. They’ve picked up a casino recently in the UK,” Mr Scott said.
“I know for a fact that Soo Kim and his team were down here in Sydney last week, or the week before … and they also checked out the Gold Coast in Brisbane.
“I simply think that they see a great opportunity here and this fits their portfolio.”
The Bally’s boss had told Mr Scott weeks earlier that he felt “pleasantly surprised there could be an opportunity” with Star despite it being plagued by poor liquidity and long list of creditors.
Mr Scott noted the Queen’s Wharf sale was a “great opportunity” for the Hong Kong investors and likely inspired Mr Kim.
“Soo Kim’s come in and said … ‘I can maybe better that or make something that would be better for the local stakeholders here in New South Wales,” he said.
The new takeover bid comes as Star owes about $430m to an array of lenders and is facing hefty fines from AUSTRAC.
Alongside the sale of it’s Queen’s Wharf stake, Star on Friday also announced a $250m bridge loan from New York-based King Street Capital Management and is expected to receive $60m from the sale of its Sydney events space.
Star is also considering a $650m financial lifeline from American asset management firm Oaktree Capital Management which could help it stay afloat.
However, this deal could be in doubt, according to Sky News’ Ross Greenwood, as Oaktree wants the “rights over the property” where the Star Casino in Sydney sits, which is owned by the New South Wales government.
“My understanding of it is that there is no way known that the NSW government will give that up easily,” Greenwood said.
“In fact, the NSW government, in my understanding, would allow the Star to go into insolvency and then deal with the administrators.”
Mr Scott said the state government should not give up the land and stressed this was not a condition of the recent takeover bid.
“I think Bally’s proposal doesn’t involve that and in that respect alone, it’s probably a better proposal,” he said.
“In addition to that, it also doesn’t propose breaking Star up.”
The casino operator was forced into a trading halt last week when it failed to publish its half year financial results amid a dire liquidity position.
Star said it was “unlikely” to lodge its financial results unless it could secure a lifeline that would “refinance all of the group’s existing corporate debt” and provide “additional liquidity”.
