Star's largest shareholder favors Bally's AU$250m offer

• Star’s biggest shareholder is all for Bally’s AU$250m controlling stake buyout
• Bruce Mathieson already holds 10% in Star and is looking to up his stake to 20%
• Star has received other offers from companies to buy into its assets and provide liquidity

Beleaguered Australian gaming major Star Entertainment Group may be closer to accepting a funding lifeline extended to the company by Bally’s Corporation earlier in March after the group’s largest shareholder said that he approved of the deal.

Star faces mounting pressure to sell vital stakes to move past its current predicament

Bally’s Corporation offered AU$250m or around $160m to acquire a 50.1% controlling stake in the company and seeks to help the group waddle out of its current financial and regulatory predicament.

Bally’s is confident that Star Entertainment Group can return back to normal and already has the necessary assets to stand out in the Australian casino market. This opinion has been shared by Bally’s Chairman Soo Kim who repeated those same remarks in several interviews he gave over the past weeks.

"It is not too late. Our proposal is not subject to due diligence or consent or anything. We can do this. Every deal we’ve done, people say ‘There’s no value there, or it is too hard’. We are usually the buyer of last resort," Kim told the Australian Financial Review most recently, arguing that Bally’s Corp was uniquely placed to help Star Entertainment Group power through this difficult spell.

Kim repeated the original promise Bally’s Corporation made in early March that the company saw a way forward offering a way to reinvigorate the assets held by Star Entertainment Group while preserving shareholder value, another critical consideration in accepting any bid that would effectively put the group under the control of another entity.

Now, Bruce Mathieson, who is himself a businessman who owns pubs and poker machines, and holds a 10% share in Star Entertainment Group, has said that he would be willing to accept the deal and argued that he would be willing to spend another AU$50m or $31m to increase his own stake in the group to 20%.

The company’s largest shareholder is looking to get bigger

Mathieson has already been cleared up to increase its stake to 20% in the group by regulators, meaning that Star may have a much easier time selling the idea of giving up a controlling stake to Bally’s Corporation to its own Board and shareholders.

Star has been navigating difficult financial seas with the company discussing possible deals with two other major partners in the face of Chow Tai Fook and Far East Consortium, both based in Hong Kong.

The two companies have been looking to buy out Star’s own 50% stake in The Star Brisbane property which opened last August and thus consolidate their standing in the Australian land-based casino market while offering enough cash on hand to Star to continue navigating this difficult period.

When Star received Bally’s proposal in early March, the board said that it was reviewing it but that it was uncertain whether it would proceed.

In February, Okatree Capital Management offered to refinance Star Entertainment's AU$650m debt, offering it more time to face its current predicament.

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