Oaktree Capital Throws Stricken Star Entertainment a $650 Million Bone

Posted on: February 17, 2025, 08:17h. 

Last updated on: February 18, 2025, 04:52h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.
  • Star Entertainment is mulling an AU$650M debt refinancing offer from Oaktree Capital, shares rally
  • Casino Operator is facing a liquidity crisis that threatens its ability to continue operating

Troubled Australian casino operator Star Entertainment has been thrown a potential lifeline by Oaktree Capital.

Star Entertainment, Oaktree Capital Management, debt refinancing
The Star Sydney, above, saw its license suspended in 2022 after it allowed itself to be used by criminal gangs to launder money. Star’s regulatory troubles have contributed to its current financial crisis. (Image: Star Entertainment)

Star announced Monday that it had an offer from the US global asset management firm to refinance AU$650 million (US$413.40 million) of its debt. The announcement caused Star’s shares to rally 8.3% on the Sydney Stock Exchange.

Star has been urgently seeking to raise cash amid a serious liquidity crunch and a crisis of confidence among its lenders. The company has repeatedly warned investors that its ability to continue operating is in doubt.

Falling Star

Shares fell to an all-time low last month when Star informed investors it had AU$79 million (US$49 million) left in the bank and had spent AU$107 million (US$66 million) in the prior three months. The company owed a syndicate of lenders AU$430 million as of December, according to its most recent quarterly accounts. Star has lost more than 96% of its value since October 2021.

Oaktree, which has a history of so-called “vulture investing,” has approached Star’s lender syndicate, which includes Westpac, Barclays, and Washington H Soul Pattinson along with other investors, with an offer to acquire their debt at a discount, according to The Australian Financial Review. The proposal would dilute investors’ shares and make Oaktree a significant shareholder in the future.

Star said it was considering the offer but provided no assurances it would be accepted.

The operator warned investors that even if it accepted the offer, it would still require additional funding for the period prior to the proposal being implemented.

Star noted that the offer “is not conditional on The Star raising subordinated capital nor any waiver or deferral of tax payable to State Governments.”

Criminal Gangs

The operator has previously sought tax deferrals from the state governments of Queensland and New South Wales, but was rebuffed. It has also considered selling its stake in the Queen’s Wharf casino and entertainment precinct in Brisbane, which opened in September.

Star’s Sydney license has been suspended since 2022 when a regulatory inquiry concluded it had allowed itself to be used by criminal gangs to launder money in private high-roller junket rooms.

The operator also permitted Chinese high rollers to withdraw a total of $900 million for gambling using China UnionPay (CUP) credit cards while disguising these transactions as “hotel expenses.”

Despite the license suspension, gaming at the Star Sydney has remained operational.