Bally's makes $250m play for Star Entertainment

The embattled Australian casino major, Star Entertainment, has faced numerous challenges over the past months, trying to maintain an unwieldy operation and dealing with regulatory and financial scrutiny proving too much for the company’s to handle.

Bally’s offers a way out for Star Entertainment

With Oaktree Capital looking to buy into the beleaguered company, this is no longer the only bid available as Bally’s Corporation is offering to purchase a $250m share into the company and helping it navigate through this bleak financial spell.

Should Star Entertainment be accepted, this would make Bally’s largest shareholder in the company. Bally seeks to acquire at least 50.1% of the company, giving it a free hand at steering Star Entertainment out of the hole it dug itself into.

The proposal suggests issuing convertible notes that could be converted into stock, although Bally’s is open to other ways of funding the deal as well.

Notably, Bally’s has reaffirmed publicly that it would be interested in preserving the interests of everyone involved, be that creditors, shareholders, and especially regulators which are the root cause of Star Entertainment’s current predicament.

Star Entertainment has been trying to rein in its spending and gets its finances in order, but the task has proven too tall. Recently, Star even divested a total worth of $53m of stake worth in the Queen’s Wharf casino project, as the company is looking to mitigate some of the financial difficulties it is experiencing.

Bally’s deal is not a bad take, as the company has shown itself by not wishing to disassemble the core business Star Entertainment has been running but rather provide the funding that the company would need to get its finances in order right now.

Bally’s prepared to spend more money as necessary

Another particular aspect that could make Bally’s a better offer than Oaktree Capital’s equivalent of "they don’t have a choice" is that the firm has shown readiness to offer more funding if the situation necessitates it.

In other words, Bally’s is prepared to acknowledge that the current $250m may not be the only money it needs to spend on fixing the company’s business model. Bally’s is also aware of the regulatory scrutiny that Star is facing in places such as New South Wales, with tightening regulation and close scrutiny contributing to the firm’s financial ailment.

Star was fined $100m over money laundering offenses in the company’s Sydney casino in 2022.

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