- Star Entertainment is mulling an AU$650M debt refinancing offer from Oaktree Capital, shares rally
- Casino Operator is facing a liquidity crisis that threatens its ability to continue operating
The beleaguered Australian casino operator Star Entertainment has received a possible lifeline from Oaktree Capital.
Star revealed on Monday that it received an offer from the US global asset management company to refinance AU$650 million (US$413.40 million) of its liabilities. The announcement led to a rise of 8.3% in Star’s shares on the Sydney Stock Exchange.
Star has been hastily trying to secure funding due to a significant liquidity shortage and a lack of trust from its creditors. The firm has consistently cautioned investors that its chance of remaining operational is uncertain.
Falling Star
Shares dropped to an unprecedented low last month when Star notified investors that it had AU$79 million (US$49 million) remaining and had expended AU$107 million (US$66 million) in the preceding three months. As of December, the firm had a debt of AU$430 million to a group of lenders, based on its latest quarterly financial statements. Star has experienced a decline of over 96% in its worth since October 2021.
Oaktree, known for its past in "vulture investing," has contacted Star's lending syndicate, comprising Westpac, Barclays, Washington H Soul Pattinson, and additional investors, presenting an offer to buy their debt at a lower price, as reported by The Australian Financial Review. The proposal would reduce investors’ shares and position Oaktree as a major shareholder moving forward.
Star mentioned that it was evaluating the offer but gave no guarantees it would be accepted.
The operator alerted investors that, even if it agreed to the proposal, it would still need extra funding for the time before the offer was put into effect.
Star pointed out that the proposal “is not contingent on The Star securing subordinated capital or any waiver or postponement of taxes owed to State Governments.”
Criminal Organizations
The operator has previously requested tax deferrals from the state governments of Queensland and New South Wales, but was denied. It has also contemplated divesting its share in the Queen’s Wharf casino and entertainment district in Brisbane, which launched in September.
Star’s Sydney license has been on hold since 2022 after a regulatory investigation found it had permitted criminal organizations to utilize its services for money laundering in exclusive high-roller junket rooms.
The operator allowed Chinese high rollers to cash out $900 million for gambling through China UnionPay (CUP) credit cards while labeling these transactions as “hotel expenses.”
Even with the license being suspended, gaming at the Star Sydney continues to operate.
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