Bally’s Corporation reportedly exploring investment in Australia’s Star Entertainment

U.S. casino operator Bally’s Corporation, controlled by New York-based hedge fund Standard General, is exploring a potential investment in embattled Australian gaming group Star Entertainment, according to The Australian Financial Review.

Bally’s representatives, including Chairman Soo Kim, traveled to Australia last week for meetings with Star’s management, lenders, and key shareholders. The discussions also included site visits to Star’s three casinos in Brisbane, Gold Coast, and Sydney, the sources said, declining to be named as the talks are private.

The move comes after Standard General completed an AU$7.2 billion ($4.6 billion) takeover of Bally’s earlier this month. “They are used to turnaround situations and could bring operational expertise,” one source said, referring to Bally’s potential role in stabilizing Star’s financial woes.

Star Entertainment, one of Australia’s largest casino operators, disclosed on January 8 that it was burning cash and had only a few months of liquidity remaining. CEO Steve McCann has confirmed that the company is operating in a “safe harbor” status, which shields directors from insolvency laws while it scrambles to secure fresh capital.

Star has been seeking funds through asset sales, additional debt, or equity injections. U.S.-based Oaktree Capital is among several investors that have approached Star’s lenders in an attempt to broker a deal.

The Australian gaming company has yet to reach an agreement with its secured lenders regarding recapitalization proposals. It has sought a $100 million bridge loan and appealed to the government for tax deferrals to ease financial strain.

Regulatory restrictions, declining consumer spending, and unexpected costs related to its new Brisbane resort have further exacerbated Star’s financial difficulties. The company also faces a potential hefty fine from AUSTRAC, Australia’s financial crime watchdog, over compliance breaches.

While Bally’s has no prior experience in the Australian gaming market, it owns 19 casinos across 11 U.S. states, a golf course in New York, and a horse racetrack in Colorado. It also holds sports betting licenses.

Star is set to report its half-yearly financial results next week, with lenders closely watching its next covenant test.