US giant to buy stake in cash-short Australian casino group
Source: AFP
Troubled Australian casino operator Star Entertainment says it has been thrown an 11th hour multi-million dollar lifeline by US-based casino giant Bally's Corporation.
Star's business -- including casinos, bars, restaurants and hotels at resorts in Sydney, Brisbane and the Gold Coast -- has been hovering close to entering administration for months.
Bally's has agreed to inject Aus$300 million (US$187 million) for a 56.7-percent stake in Star, the two firms said in separate statements late Monday.
The US group is to make an initial payment of Aus$100 million on Wednesday, with the rest due after the approval of shareholders and regulators.
"This transaction provides Bally's the opportunity to infuse The Star with what it needs to regain its position as Australia's preeminent gaming destination," Bally's chairman Soo Kim said.
Star said it was also talking to its biggest shareholder, Investment Holding, about joining the deal with an Aus$100 million injection.
If that deal went ahead, Bally's participation would drop to Aus$200 million.
Shares in Star, which employs more than 8,000 people, have been suspended from trading since March 3 after it failed to post half-year financial results citing liquidity woes.
The casino said in a statement late Monday it intended to "unanimously recommend" the deal to shareholders in the absence of a better offer.
Bally's manages 19 casinos across the United States, a golf course in New York and a horse racing track in Colorado.
Star Entertainment last traded at Aus$0.11 a share with a market capitalisation of Aus$316 million -- a far cry from its Aus$5 billion-plus value of seven years ago.
Its finances were squeezed by the cost of developing its Brisbane resort, the threat of an anti-money laundering fine, and stricter regulation in the industry, according to the Australian Financial Review.
The company has previously been accused of not adequately policing criminal infiltration and doing little to vet the sources of money coming into the business.
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Source: AFP
