US gaming giant Bally’s Corporation makes $250m | Australian Markets

US on line casino operator Bally’s Company has made a dramatic last-ditch $250m offer for embattled gaming giant Star Leisure that might protect Star’s footprint in Brisbane, the Gold Coast and Sydney.

The offer, delivered in a letter to Star’s board on Monday morning, would inject $250m into Star in return for a 50.1 per cent stake within the company.

Bally’s chairman Soo Kim mentioned the deal would protect Star’s “businesses, assets and platforms”, which means its Brisbane, Gold Coast and Sydney operations.

“Our strategy for Star is built on the simple premise that keeping in place Star’s current businesses, assets and platforms will provide a stronger and more successful business over time,” the letter reads.

“While we understand the rationale for Star’s recently announced transactions, we believe that our proposal offers Star and its stakeholders far greater value and operational flexibility as well as the upside from retaining Star’s current projects and other assets.”

The shock Bally’s transfer hopes to snuff out a deal brokered on Friday that includes Star promoting out its place in Brisbane to its Chinese language three way partnership companions and consolidating its operations on the Gold Coast and Sydney.

Mr Kim mentioned his company was ready to “invest significant time and resources” to return Star to “profitability and sustainability”.

“Our team has successfully improved more than 20 individual property acquisitions over 15 years in a variety of challenging circumstances, across the entire spectrum of gaming regulatory environments and market conditions,” Mr Kim mentioned.

“We are prepared to invest significant time and resources to work with the company and return Star to profitability and sustainability.

“We have retained experienced financial and legal advisers and are prepared to engage immediately.”

Bally’s operates 19 resorts and casinos throughout the US, together with casinos in gaming meccas Las Vegas and Atlantic Metropolis.

The important thing plank of the proposal includes a capital raise of at the very least $250m in convertible notes subordinated to Star’s current senior lenders.

A convertible notice is a loan that may be transferred, or “converted”, into equity or shares in a company.

“The convertible notes would be convertible into at least 50.1 per cent of Star’s fully diluted ordinary shares,” the letter states.

Mr Kim additionally mentioned he was open to discussing a “larger transaction depending on our discussions with respect to Star’s liquidity and capital needs”.

“We would also be happy to explore alternative structures that would similarly preserve value for all key constituents, including regulators, creditors, equity holders and employees,” he mentioned.

“Our proposal is fully funded and not subject to any financing contingencies.”

Bally’s mentioned it had US$171m money readily available as of December 31, and a US$620m revolving credit facility.

“In short, we have ample unrestricted liquidity to complete this transaction expeditiously,” Mr Kim mentioned.

Late Monday morning, Star confirmed it had acquired the “unsolicited, non-binding” offer from Bally’s.

“The Board of The Star will review Bally’s proposal,” the company mentioned.

“However, there is no certainty that it will be progressed.”

In an announcement from Friday final week, Star mentioned it had entered into an settlement with Chow Tai Fook Enterprises and Far East Consortium to exit its 50 per cent curiosity within the Queen’s Wharf precinct in Brisbane.

The company mentioned the deal would help it with near-term liquidity challenges and in addition take away a looming $1.4bn debt obligation.

“The transaction has a number of financial benefits for The Star,” the company mentioned.

“An upfront cash payment of $53m, with $35m received today. This payment supports The Star’s near-term liquidity needs.

“The Star will not be required to make further equity contributions to DBC (Destination Brisbane Consortium) after March 31, 2025.

“The Star had otherwise expected future equity contributions to DBC to be at least $212m.

“A condition of the transaction is that The Star will be released from the parent company in relation to its 50 per cent share of the DBC debt facility (current drawn balance is $1.4bn).”

Star would additionally hand over its Treasury Resort and carpark within the Brisbane CBD below the deal.

The company additionally secured a separate $250m bridging loan from US hedge fund King Road Capital Administration final week.

Shares in Star remained suspended from trading because the company scrambles to stave off collapse.

The troubled gaming giant is sort of out of money and confronting a extreme downturn in revenues as an exodus of high rollers and cost-of-living pressures hit the business.

It is usually battling a tangled swirl of company watchdog investigations and penalties for severe failures at its operations.

In October 2022, the NSW Impartial On line casino Fee imposed a $100m fantastic on Star after discovering the company had allowed money laundering to happen at its Sydney on line casino.

A report into the business additionally discovered the company had exploited weak gamblers.

NSW Premier Chris Minns and Queensland Premier David Crisafulli has to this point declined to offer taxpayer money to bail out the company, which counts some 9000 workers throughout the 2 states.

The company’s collapse has been gradual however regular.

In July final yr, the company held a market capitalisation of $1.5bn.

Bally’s and Star have been contacted for remark.