Bally’s May Be Examining Star Entertainment Buy

• Bally’s could be among parties interested in Star Entertainment
• List of potential bidders for Aussie casino operator grows

Add Bally’s (NYSE: BALY.T) to the list of “vultures” that may be circling the soon-to-be carcass that is Star Entertainment.

The regional casino operator is said to have sent representatives to Australia last week to meet with Star officials and visit the company’s gaming venues. Citing unidentified sources with knowledge of the matter, The Australian Financial Review reported a Bally’s delegation was recently in Australia meeting with Star executives as well as creditors and equity investors.  It’s rumored that Soo Kim was part of that group. Kim founded Standard General — the hedge fund that recently acquired Bally’s.

Star’s holdings include its flagship, namesake property in Sydney as well The Star Brisbane and the Star Gold Coast. It’s believed Bally’s representatives toured that trio of casino hotels.

Rhode Island-based Bally’s currently doesn’t run brick-and-mortar gaming venues outside the US. In this country, the company runs 19 casinos in 11 states and is in the process of building Chicago’s first integrated resort — the operator’s most expensive project to date.

Bally’s Joins Other US Firms Eyeing Star

Rumors of Bally’s purported interest in Star come ahead of the Australian earnings report, which is scheduled for next week. Some analysts believe that those results, which include figures for the back half of 2024, will pain a clearer picture of the operator’s ability to survive as a going concern over the near-term.

Recent reports indicate private equity firm Blackstone (NYSE: BX) could be interested in acquiring Star with the caveat being that it wants to wait for Star to be placed into administration by the Australian government, meaning the purchase price would be low.

Another US-based private equity firm is rumored to be in talks to help Star refinance its $413.40 million in liabilities. In late January, speculation surfaced that New York-based Cerberus Capital Management approached Star creditors about purchasing some of that debt on the cheap, but the involved parties haven’t publicly commented on the matter. Star lenders include Barclays, Deutsche Bank, Soul Pattts, and Westpac, among others.

Bally’s Could Be Credible Star Player

Based on Star’s current market capitalization of $247 million and its debt of $413.40 million, the gaming company has an enterprise value of $660.40 million. With its shares sliding and its near-term viability in doubt, it’s possible prospective buyer would have considerable negotiating power.

In terms of financing a potential deal for Star, Standard General has levers to pull with Bally’s, including sales of real estate or its scuffling online sports betting unit. The regional casino operator hasn’t signaled that either approach is one it’s willing to take to execute a deal for Star.

It’s also possible that if Star is placed into administration, not only will the purchase price decline, but prospective buyers could also pickoff individual assets rather than the entire company.