The chairman of Bally’s Corporation says that the US-based gaming operator was originally going to wait for Australia’s The Star Group to enter voluntary administration before investing in the company. However, the company was worried the group would be too hard to rescue at that point.
Bally’s chairman Soo Kim told Reuters that the company had been looking at The Star for well over a year, but when it “saw the company start to sell their proverbial furniture, burn the furniture for firewood we decided to move”.
The executive furthered that “given there was a fire sale of assets, there might not be anything left if administration was to come.”
The Star Entertainment Group entered into a AU$300 million ($180.8 million) investment agreement with Bally’s Corporation in early April, with some AU$100 million ($60.4 million) being contributed by The Star majority shareholder, and pokie billionaire Bruce Mathieson.
The investment will be executed through multi-tranche convertible notes and subordinated debt instruments, pending regulatory and shareholder approvals. A shareholder vote is scheduled for June.
It leaves Bally’s Corp and the Mathieson family with a majority 56 percent of The Star’s issued capital.
A previous AU$940 million ($593 million) refinancing plan with Salter Brothers Capital (SBC) collapsed prior to The Star’s acceptance of Bally’s proposal.
Prior to the deal, The Star had also negotiated the sale of its 50 percent stake in Queen’s Wharf Brisbane to its Hong Kong-listed joint venture partners in the project: Chow Tai Fook and Far East Consortium.
According to Reuters, Bally’s Corp has applied to the governments and regulators in New South Wales and Queensland – where The Star operates its casinos – for approval.
Kim is also set to join The Star’s board as an observer as the groups await shareholder and regulatory approval.
Kim indicates that the company aims to refocus The Star’s efforts on Australian punters and shift away from foreign VIPs, an essential move in the current financial and regulatory environment.
He also indicated that he was not surprised that a large casino operator such as The Star could reach a state where it required voluntary administration, noting: “For Star to end up near bankruptcy is not uncommon for the industry, it’s a small universe and we are one of the few players who specialise in turnaround casinos, so you can make an assumption that when a casino is in trouble we are shown that opportunity”.
