Star Entertainment extends refinancing talks as AU$940M debt deal hangs in balance

Star Entertainment Group has extended exclusive negotiations with Salter Brothers Capital (SBC) in a bid to secure a sweeping debt refinancing package that could stabilize its financial position. The extension, confirmed in a filing to the Australian Securities Exchange (ASX) on Monday (25 March), gives SBC until 1 April to make a binding offer.

First announced earlier this month, the proposed deal would deliver up to AU$ 940 million ($593.27 million) in debt relief, allowing Star to refinance its entire corporate debt. In a statement, the operator emphasized that the SBC proposal “is not conditional on either the purchase of the existing senior debt at a discount to par or any government tax deferrals or waivers.”

Salter Brothers’ bid is one of several potential lifelines Star is evaluating amid financial turbulence and a shifting ownership. A rival proposal by U.S.-based Oaktree Capital, submitted in February, offers up to AU$ 650 million ($410.24 million) through two five-year debt facilities. However, Star has indicated that several conditions attached to Oaktree’s proposal remain unmet, delaying any approval.

Meanwhile, a third proposal from Bally’s Corporation has added a new dimension to the restructuring process. Earlier this month, Bally’s submitted a non-binding offer to acquire a 50.1% stake in Star for AU$ 250 million ($157.78 million). Bally’s has suggested that it is open to negotiating a more extensive transaction and has stressed that the offer is fully funded and not subject to contingencies.

Star’s largest individual shareholder, Bruce Mathieson, has reportedly endorsed the Bally’s offer and pledged an additional AU$ 50 million ($31.56 million) to support the acquisition. Mathieson currently owns approximately 10% of Star and has regulatory clearance to increase his stake to 20%. The deal could also see him secure a seat on Star’s board.

As these negotiations continue, Star is also contending with the fallout from its decision to exit the Queen’s Wharf Brisbane project. The operator recently sold its 50% stake in the multi-billion-dollar joint venture to partners Chai Tow Fook and Far East Consortium for AU$53 million ($33.45 million). 

The move relieved Star of future capital obligations exceeding AU$ 200 million ($126.23 million) and its exposure to a debt facility currently drawn at AU$ 1.4 billion ($0.88 billion). In exchange, Star gained full control of its Gold Coast property.

Bally’s has expressed reservations about the Queen’s Wharf exit, maintaining an interest in acquiring all of Star’s assets. In its offer letter, Bally’s stated that its proposal offers “far greater value and operational flexibility,” and supports retaining Star’s current assets and development pipeline. 

“It is not too late to make a deal,” Bally’s chairman Soo Kim told the Australian Financial Review. “Our proposal is not subject to due diligence or consents or anything. We can do this.”