The Star Entertainment Group has entered into a AU$300 million ($180.8 million) investment agreement with Bally’s Corporation, marking a strategic move to bolster its faltering financial position.
The investment will be executed through multi-tranche convertible notes and subordinated debt instruments, pending regulatory and shareholder approvals.
A previous AU$940 million ($593 million) refinancing plan with Salter Brothers Capital (SBC) collapsed last week, leaving the Bally’s proposal as one of The Star’s last options.
The funding will be provided in two tranches. Tranche 1, valued at AU$100 million ($60.4 million), is expected by April 9th, 2025, contingent on approvals from The Star’s senior lenders.
Tranche 2, worth AU$200 million ($120.8 million), requires shareholder approval and regulatory clearances, with payments structured based on the timing of approvals. If these approvals are delayed, payments may extend to October 7th, 2025.
The securities offered include convertible notes and subordinated debt. The first tranche comprises Tranche 1A notes, convertible into 9.71 percent of The Star’s pre-issue capital, and Tranche 1B notes, representing 4.85 percent.
Additionally, AU$66.6 million ($40.2 million) in subordinated debt is included, with potential adjustments if regulatory approvals are delayed. Once both tranches are combined, Bally’s will have the option to convert its investment into 56.7 percent of the company’s fully diluted shares.
The notes carry a 9 percent annual interest rate, payable quarterly in cash or kind, and the conversion price is set at 8 cents per share, subject to standard adjustments. The first tranche does not require shareholder approval, as it falls within The Star’s existing placement capacity.
However, Tranche 2 must be approved by shareholders, along with regulatory clearance from Australia’s Foreign Investment Review Board and state authorities.
Potential changes to investment structure
The Star is also in discussions with Investment Holdings Pty Ltd, controlled by the Mathieson family, for a possible AU$100 million ($60.4 million) subscription. If confirmed, Bally’s investment would be reduced to $200 million ($120.8 million).
The Star’s Board said it ‘unanimously supports’ the transaction, pending an independent expert’s confirmation that the deal is in the best interest of shareholders.
A formal information booklet, including recommendations and expert analysis, will be submitted to the nation’s financial regulator ASIC and distributed to investors in May 2025, ahead of a shareholder vote in June 2025.
