A prominent U.S. gaming company is bailing out a struggling Australian casino group.
Key Takeaways
- Bally’s agrees to infuse The Star with $187 million, including $60.5 million by Wednesday.
- The U.S. gaming company would receive 56.7% control of the Australian company once the deal is fully completed.
- The Star has dealt with several financial and legal matters over the last few years.
Bally’s announced Monday that it reached an agreement to infuse The Star Entertainment with $187 million (AUD $300 million). The deal will fund The Star with $60.5 million by Wednesday, with another surge of $151.3 million through a multi-tranche of subordinated convertible notes and subordinated debt, according to the release.
"This transaction provides Bally's the opportunity to infuse The Star with what it needs to regain its position as Australia's preeminent gaming destination,” Bally’s chairman Soo Kim said. “And it allows The Star shareholders to share in what we confidently believe will be a brighter future together."
The Mathieson family, The Star's largest shareholder, is working on an agreement to provide $60.5 million. If that deal goes through, Bally’s contribution would drop to $122 million, and it would eventually receive 56.7% control of The Star.
Financial and legal issues
This agreement comes a month after Bally’s placed a bid to rescue the Australian casino operator, which has been dealing with budget restraints and regulatory probes for the last few years.
The Star sold off 50% of its stake in the Queen’s Wharf casino project in Brisbane for $53 million. The company didn’t have enough cash for the board to sign off on its half-yearly earnings, and failure to issue a warning led to a share-trading suspension.
The Star has also dealt with legal matters, including regulators issuing a $100-million penalty for alleged money laundering at its Sydney casino in 2022. The Australian Securities and Investments Commission also punished two former administrators for failure to fulfil duties, while legal action against former board members continues.
‘Up for the challenge’
The Star employs 8,000 people and operates resort casinos in Brisbane, Sydney, and the Gold Coast.
Bally’s owns and operates 19 casinos across 11 U.S. states, holds sports betting licenses in 13 North American jurisdictions, and operates Bally Casino, an iGaming product.
Bally’s said that the agreement with the Australian company is “intended to preserve The Star’s long-term potential.”
"We are excited to bring our reputation and operating expertise to a wonderful set of properties that operate in fantastic markets,” Bally’s president George Papanier said. “We are up for the challenge."
