The embattled Star Entertainment Group has announced that it has received a debt financing proposal from funds associated with Oaktree Capital Management.
The proposal includes a commitment letter and a term sheet outlining the terms for a total of AU$650 million (US$414 million) in two debt facilities, each with a term of five years.
According to Monday’s filing with the Australian Stock Exchange (ASX), the proposal is subject to several conditions, including the completion of due diligence on specified matters, as well as a comprehensive security package and intercreditor documentation.
Besides, it requires consent from the New South Wales and Queensland governments and regulators. The proposal also depends on the existing senior facilities agreement (SFA) lenders entering into a settlement or refinancing agreement on terms that are satisfactory to Oaktree.
The filing highlights that the proposal is not conditional on The Star raising subordinated capital, nor is it dependent on any waiver or deferral of tax payable to state governments. However, the Board of The Star will still need to review the proposal, and there is no certainty that it will proceed or that the conditions will be met.
In the event that The Star proceeds with the proposal, the company may require additional funding before the proposal is fully implemented.
The group has continued to explore potential liquidity solutions, but the filing underscores that there is no certainty that any of these discussions or negotiations will lead to definitive agreements that could significantly improve the group’s liquidity position.
The Star Entertainment further noted that, in the absence of a successful arrangement, there remains material uncertainty regarding its ability to continue as a going concern.
Earlier last week, The Star Entertainment rejected the initial offers from its Hong Kong-listed partners, Chow Tai Fook Enterprises Limited (CTFE) and Far East Consortium International Limited (FEC), to acquire its 50 percent stake in The Star Brisbane integrated resort.
Despite rejecting these bids, the company confirmed that discussions with CTFE and FEC are ongoing. The company continues to explore the possibility of selling its stake in the Destination Brisbane Joint Venture (DBJV), which owns The Star Brisbane.
