Bally’s Corporation Chair Soo Kim has revealed the company triggered its deal with The Star Entertainment Group after fears the casino group would have no assets left if it potentially entered administration.
During an interview with Reuters, Kim revealed that Bally’s was initially going to wait until The Star entered potential administration before agreeing to a deal with the Australian casino group.
However, as the group began to move its assets, Bally’s stepped in, as it believed that waiting any longer could result in there being nothing left when possible administration was initiated.
The binding term sheet between Bally’s and The Star is a multi-tranche issuance of subordinated convertible notes and subordinated debt with an aggregate principal value of AUD $300m (approximately USD $190m).
Subject to shareholder and regulatory approval, and following the conversion of notes, around 56.7% of the fully diluted share capital of The Star would be owned by Bally’s if it subscribes for 100% of the notes.
The company stated that Investment Holdings Pty Ltd, controlled by the Mathieson family and The Star’s major shareholder, may separately subscribe for a portion of the notes, reducing Bally’s’ commitment by an equal amount.
Kim said to Reuters: “This came together quickly this year, but we had been looking at it for well over a year. When we saw the company start to sell their proverbial furniture, burn the furniture for firewood, we decided to move.
“We thought about waiting for voluntary administration, but we thought, given there was a fire sale of assets, there might not be anything left if administration was to come.”
Last month, The Star reached an agreement with its Joint Venture Partners – Chow Tai Fook Enterprises Limited and Far East Consortium International Limited – for a cash amount of AUD $53m.
In turn, The Star will exit the Destination Brisbane Consortium that owns the Queen’s Wharf Brisbane Integrated Resort and consolidate its position at the Gold Coast.
While Bally’s waits for shareholder and regulatory approval for its deal with The Star, Kim will join the Australian casino group board as an observer.
Regarding The Star’s future, Kim told Reuters that Bally’s plans are to focus on Australian gaming customers rather than trying to appeal to overseas high-rollers.
