Oaktree’s offer is subject to numerous conditions and there is no certainty it will progress, Star says
STAR Entertainment Group received a potential lifeline from alternative asset manager Oaktree Capital Management, which offered to refinance A$650 million (S$554 million) of the struggling Australian casino operator’s debt.
Star has been racing to raise capital after last month warning its future as a viable business is in doubt as it runs short of cash. The company needs to raise A$150 million of subordinated debt to tap an agreed lifeline of a further A$100 million of borrowings, but has repeatedly said conditions to do so “remain challenging”.
Oaktree’s offer is subject to numerous conditions and there is no certainty it will progress, Sydney-based Star said on Monday (Feb 17).
Among those conditions are a “comprehensive” security package and inter-creditor documentation which requires approval from New South Wales and Queensland state governments and regulators, completion of due diligence, and that existing lenders enter a settlement and/or refinancing agreement on terms satisfactory to Oaktree, Star said. However, it does not require Star to raise subordinated capital or get a tax holiday from the state governments.
If the proposal does proceed, Star will require additional funding for the period prior to it being implemented, the company said.
Star shares rose 4.2 per cent in Sydney trading at 10.55 am Almost A$4 billion has been wiped from Star’s market capitalisation since late 2021, leaving the company valued at around A$360 million.
Last week, Star said it was in talks to sell its stake in a new Brisbane complex to its Hong Kong-based partners, though their opening offers were rejected as too low.
Star last month said it had just A$78 million of available cash at the end of 2024, having burned through almost half of its funds in the last quarter.
The firm’s troubles date back to October 2021, when the Sydney Morning Herald reported the company had enabled suspected money laundering, organised crime and fraud at its casinos for years. Regulatory inquiries have since found Star unsuitable to operate its Sydney and Queensland casinos, placing them under government supervision. BLOOMBERG
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