Star Entertainment Group—backed by Australian billionaire Bruce Mathieson—has received an AU$650 million ($414 million) debt refinancing offer from U.S. alternative asset manager Oaktree Capital Management, providing the cash-strapped casino operator a potential lifeline.
The Star complex in Sydney, Australia.
Los Angeles, California-based Oaktree Capital is offering to refinance Star’s two debt facilities with a term of five years, the company said in a regulatory filing. However, Star warned that the deal is still dependent on several conditions and there is no guarantee that the proposal will move forward.
The proposed transaction is conditional upon a comprehensive security package, intercreditor documentation requiring approval from regulators, completion of due diligence, and an agreement from existing lenders to settle and refinance on terms acceptable to Oaktree, according to Star. Should the proposal move forward, Star said it would still need additional funding prior to the deal’s completion.
Star has struggled to raise fresh capital amid slumping gaming revenues. The company is exploring various options to boost liquidity, but it has limited capacity to raise A$150 million ($93 million) in subordinated debt, which is a crucial requirement for unlocking an additional A$100 million loan.
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In a bid to raise fresh capital, the company said last week it had received non-binding offers from Hong Kong-based partners including Chow Tai Fook Enterprises (controlled by real estate billionaire Henry Cheng and his family) and Far East Consortium to buy 50% of its resort complex in Brisbane. The offers were however rejected as they didn’t reflect the sufficient value of the assets.
Mathieson is Star’s largest shareholder with a stake of about 10%, according to the company’s latest annual report. He has an estimated net worth of $1.1 billion according to Forbes’ real-time data. Mathieson runs his poker machine and pub empire, Australian Liquor and Hospitality, in a joint venture with supermarket giant Woolworths. He also holds a minority interest in the publicly listed Endeavour Group, which owns both the Australian Liquor assets and Woolworths’ liquor retailing business.
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