Stricken Star Entertainment Turns to Bally’s After Rescue Deal Collapses

• Star’s $940M rescue deal collapses
• Operator has one week of cash remaining
• Bally’s offer is $250M for 50.1% of Star

Star Entertainment remains on the verge of collapse after an AU$940 million (US$592 million) deal to rescue the Australian casino giant fell through.

The financially distressed operator said in a statement to the ASX Wednesday that a refinancing arrangement with Salter Brothers Capital has now been withdrawn. Star is now exploring a lifeline from US casino group Bally’s Corp as it struggles to stay afloat amid a serious liquidity crunch.

The company has enough cash to remain operational for one week, The Australian Financial Review reported on Wednesday.

Star’s shares are suspended from trading on the ASX and there remains “material uncertainty as to the Group’s ability to continue as a going concern,” according to the operator.

Running Out of Time

Salter Brothers, a Melbourne-based investment group, failed to put forward a binding debt commitment that could have given Star the funds it needed to stabilize its balance sheet, the company said in its filing.

“The withdrawal of the refinancing proposal follows extensive engagement by The Star with Salter Brothers Capital and relevant third parties, including state governments and regulators,” the operator added.

As a result of that engagement, it became apparent that it was unlikely that a number of the conditions precedent to the refinancing proposal would be able to be satisfied, either at all or in sufficient time to address the current liquidity needs of the company.”

“In particular, lender requirements for specific priority arrangements and enforcement rights in relation to their proposed security over non-gaming assets of The Star could not be met.”

Can Bally’s Save Star?

Star said it “continued to explore liquidity solutions,” which include an offer from Bally’s for AU$250 million (US$156 million) in exchange for 50.1% of the company. The US operator has said it’s prepared to “move quickly” to secure a deal.

Bally’s CEO Robeson Reeves told Sky News on Sunday the company was interested in the whole package.

“We want to keep everything together rather than strip it apart,” he said.