Star Shareholders OK $300 Million Bally’s-Led Rescue Deal, Averting Collapse

• Star investors approve urgent bailout to avoid administration
• Bally’s, Mathiesons gain control through convertible notes deal
• Company still faces AUSTRAC case, major fine possible

Star Entertainment group’s (SGR.AX) shareholders voted overwhelmingly on Wednesday to approve an AU$300 million (US$195 million) rescue package from US gaming operator Bally’s Corp (NYSE: BALY.T) and the Mathieson family, the company’s largest existing investor.

The vote came after Star chairman Anne Ward told shareholders at a general meeting in Sydney there was no alternative if the business was to avert financial collapse.

“The strategic investments … provide cash funding and assist Star’s ability to continue as a going concern, helping to avoid outcomes such as voluntary administration, which is likely not in the best interests of shareholders,” Ward told the meeting, as reported by Reuters.

Overwhelming Support

More than 98% of proxy votes supported the emergency funding plan. A final tally of the vote was expected to be released later Wednesday.

Under the approved deal, Bally’s will deliver AU$200 million, and the Mathiesons AU$100 million in exchange for convertible notes that, once converted, will give the two parties combined control of roughly 56%–61% of Star’s issued capital. The precise total stake depends on final conversion terms.

At the same time, the company has been facing multiple regulatory investigations related to inadequate anti-money laundering (AML) controls and corporate governance failings.

These issues led to the suspension of its half-year financial statements, a brief trading halt in February, and its shares being suspended from the ASX in March. At one point, the company reportedly had only AU$79 million in cash, enough to stay afloat for just one more week.

Storm Clouds Linger

To bolster its financial position ahead of the deal, Star has been divesting assets, including a 50% stake in the AU$3.6 billion Queen’s Wharf Brisbane development to Hong Kong-based partners Far East Consortium and Chow Tai Fook for just AU$53 million, plus selling the theatre adjacent to its Sydney casino.

Star has warned that even an AU$100 million fine could jeopardize its ability to continue as a going concern.