Star Entertainment’s biggest single shareholder backs Bally’s takeover

Bally’s has received a key endorsement for its proposed takeover of the Star Entertainment Group after Bruce Mathieson pledged a further AU $50 million ($31.42m) if the deal progresses. 

The billionaire is the largest individual shareholder in the company, with a 10% stake which would be doubled if Bally’s proposal is approved. 

The Australian Financial Review has also indicated his renewed investment would include board representation. Regulatory approval for Mathieson to control 20% of the shares appears to underline his commitment to the plans of the Rhode Island-based gambling operator. 

The fresh injection of funds would add to the working capital required to breathe new life into Star, after several regulatory, operational, and financial setbacks over the last two years.

Under Bally’s proposal, at least AU$250m would be bumped into the ailing Australian firm through convertible notes issued to Star’s main lenders which would be converted into a 50.1% controlling holding in Star Casino.

“In short, we firmly believe that our approach… of new long-term capital plus operational track record will unlock the best alternative for Star and its shareholders,”  said Bally’s in a letter sent to the stock exchange, earlier this month.

The American entity was also said to be open to acquiring a larger stake in Star, with consideration to be given to other deal structures put forward.

Star has not yet made its move, with different options on the table, but the situation is expected to develop soon given the company’s overall predicament.

The relative silence can be traced back to an exclusivity agreement signed with the Star’s existing Hong Kong partners, Chow Tai Fook Enterprises and Far East Consortium.

They both hold a 25% stake in Star’s new Brisbane casino, with a further $53m package agreed for the other half of the equity. 

A filing was made on Friday, March 7 to the Hong Kong Stock Exchange, which would see Star relinquish control of the Queen’s Wharf development.

The exclusivity deal prevents Star from engaging with other potential investors until after March 25 (tomorrow), while there is another proposal from the Salter Brothers private equity house in contention.

It is clear there are several moving aspects to what is a fluid situation, but Mathieson’s intervention is a significant boost in Bally’s favor.

Image credit: Bally

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