Star Entertainment shareholders approve Bally's takeover bid
Embattled casino operator Star Entertainment Group’s shareholders have approved the A$300 million ($201 million) rescue package from US giant Bally’s Corporation in a very strong consensus to avert collapse. Over 98 percent of shareholders have approved the takeover bid in the scheduled meeting on 25 June.
The A$300 million funding package comprises a multi-tranche convertible note and subordinated debt instrument, split between Bally’s Corp and Bruce Mathieson’s Investment Holdings. Bally’s will contribute A$200 million while Investment Holdings will be investing A$100 million to the Star. The deal will reportedly see Bally’s take control of 38 percent of the operator while Investment Holdings will take about 23 percent.
Shareholders urged to ‘unanimously recommend’ takeover
Prior to the rescue package getting the green light, The Star urged its shareholders to “unanimously recommend” the takeover bid. In a statement, the operator said that the recommendation stands “in the absence of a superior proposal” and if the independent expert maintains its current opinion as outlined in the Explanatory Memorandum. The Star’s chair Anne Ward had also urged shareholders to vote in favour of the deal.
“The Star and its advisors have pursued a range of funding options with an increasing degree of urgency over the last 12 months, including asset sales and a variety of recapitalisation proposals,” Ward said. “But as the independent expert said, the Star and its advisors have essentially exhausted all options.” She added, “The strategic investments are the only remaining funding solution available”.
Ongoing battles
Amid the ongoing battles that The Star currently faces is a looming A$400 fine from Australian Transaction Reports and Analysis Centre (AUSTRAC) over money laundering breaches. The casino operator warned that the proposed A$400 million fine from the nation’s financial crimes watchdog could push the company into bankruptcy. The operator said that any fine by the AUSTRAC over A$100 million will put the company’s “ability to survive as a business is in serious doubt.” The warning was reportedly issued by Star’s representative Steven Finch during closing submissions to the Federal Court.
In April-end, The Star swung to an operating loss in the third quarter. The loss was attributed to declining foot traffic, ex-Tropical Cyclone Alfred and tighter gambling regulations. For the quarter, Star reported a loss in earnings before interest, taxes, depreciation and amortisation (EBITDA) of A$21 million. The operator registered a revenue of A$271 million for the third quarter—a drop of 9 percent from the December quarter, and a 35 percent drop year-on-year.
