A last-minute spanner has been thrown into the elaborate works to keep Star Entertainment afloat, with American gaming giant Bally's Corporation reportedly proposing a recapitalisation plan to take control of the ailing Australian company.
Bally’s flew in with its own rescue plan conveyed via a letter to Star’s board in which it proposed a A$250 million investment in the ASX-listed casino and resorts group in return for at least a 50.1% per cent stake, according to media reports.
The Australian Financial Review and The Australian wrote that Bally’s Chairman Soo Kim sent the letter to Star Chair Anne Ward putting forward “an alternative path” to the rescue announced on Friday in which Star sells a key asset and receives short term funding to allow time to refinance its debt before it runs out of cash.
At the time of writing, Azzet had received no response from Star for a comment on the media reports.
Star said on Friday it had agreed to sell 50% of the new Star Brisbane casino and resort to its joint venture partners Chow Tai Fook Enterprises and Far East Consortium International and signed a $250 million bridge facility to provide more cash while it seeks liquidity for a long-term refinancing of senior debt.
In its letter, Kim acknowledged the alternative rescue plan but emphasised Bally’s proposal was fully funded and not subject to financing contingencies, the media reported.
“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,” Kim was quoted as saying.
Under the plan, Star would issue notes to Bally’s which would be convertible into a minimum of 50.1% of Star’s fully diluted ordinary shares.
Star’s shares are suspended because its directors had been unable to sign the accounts due to doubts about its ability to meet short term liabilities as it burns through cash, which amounted to $79 million on 31 December.
