- Bally’s offering AU$250 million in financing for embattled Star
- Regional casino operator believes its bid is superior to Hong Kong investor offer to buy Star Brisbane
Bally’s (NYSE: BALY.T) has swooped in with an 11th-hour bid to save ailing Star Entertainment, offering the downtrodden Australian casino operator AU$250 million in financing in exchange for 50.1% of its equity.
The bid floated by the Rhode Island-based regional casino operator emerged just three days after Star agreed to sell The Star Grand Brisbane casino resort to Hong Kong-based firms Chow Tai Fook and Far East Consortium. As part of that deal, which would provide the seller with a much-needed financial lifeline, the buyers would take on AU$430 million in debt owed by the seller. In a letter to the Star board of directors, Bally’s said it’s providing “an alternative path” to offer from the Hong Kong investors.
Bally’s would underwrite the entire amount of the capital raise, but would be supportive of providing Star’s existing shareholders the right participate in a significant portion of the offering on a pro rata basis,” said Bally’s Chairman Soo Kim in a the letter. “To be clear, we remain very open to discussing a larger transaction depending on our discussions with respect to Star’s liquidity and capital needs.”
Kim is the founder of Standard General, the hedge fund that recently acquired Bally’s.
Bally’s Move on Star Not Surprising
It’s not surprising that Bally’s is making a move on Star because the suitor has an acquisitive history. In its current form, which includes 19 casinos across 11 states, Bally’s was built on acquisitions.
Additionally, speculation surfaced last month that Bally’s executives, perhaps including Kim, traveled to Australia to meet with Star management and tour the company’s gaming venues there. Star’s holdings include its flagship, namesake property in Sydney as well the Star Brisbane and the Star Gold Coast.
Bally’s views its offer as superior to the bid for Star Grand Brisbane because, as Kim noted in his letter to the board, there would be no financial contingencies because Bally’s had $171 million in cash on hand at the end of 2024 and access to another $620 million on an undrawn revolving credit facility. That implies the operator can immediately inject cash into Star without needing to head to capital markets.
“Importantly, our proposal delivers more than capital: Bally’s would partner with Star in deploying our significant operating experience in turning around casino assets and growing highly successful casino businesses globally,” wrote Kim.
Bally’s Has Signaled International Ambitions
Bally’s has interactive gaming exposure in Europe and the Asia-Pacific region, but all of its land-based assets are located in the US. The operator has previously toyed with the idea of expanding its casino portfolio outside the US, floating a proposal for a Japanese gaming license in 2022.
In his letter to the Star board, Kim didn’t mention the possibility of the target’s venues eventually taking the Bally’s name, but he was clear to note that should a deal be reached, Bally’s would keep Star assets in place while bolstering those properties.
“Our strategy for Star is built on the simple premise that keeping in place Star’s current businesses, assets and platforms will provide a stronger and more successful business over time,” wrote the chairman. “While we understand the rationale for Star’s recently announced transactions, we believe that our proposal offers Star and its stakeholders far greater value and operational flexibility, as well as the upside from retaining Star’s current projects and other assets.”
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