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Regulators in NSW and Queensland have given US casino giant Bally’s the green light to become a substantial holder of The Star Entertainment Group (ASX: SGR) - a decision that comes six months after the company offered a $300 million rescue package for the embattled operator.
Both the NSW Independent Casino Commission (NICC) and the Queensland Office of Liquor and Gaming Regulation have completed their investigations into the suitability of Bally’s to be involved in the ownership and management of the Star, which has been battling financial instability, regulatory inquiries and uncertainty surrounding its AUSTRAC penalty.
In April, the Australian gambling and resorts group announced it signed a binding $300 million term sheet with US-based Bally’s Corporation, which says it has “improved more than 20 property acquisitions over 15 years in challenging circumstances”.
Bally’s has offered a $300 million multi-tranche convertible note to secure 56.7 per cent of The Star’s issued capital, including an initial $100 million six months ago.
The remaining $200 million hinged on regulatory sign-off from the NSW and Queensland regulatory bodies, the Foreign Investment Review Board (FIRB) and the Australian Securities Exchange (ASX), plus continued compliance with The Star’s existing senior lender facility.
The NICC’s chief commissioner Philip Crawford said Bally’s had submitted a plan to improve on The Star’s financial performance, which it will be required to report back on regularly as a condition of the approval.
“Bally’s Corporation and its associated entities have undergone a rigorous assessment and ultimately satisfied the NICC that there are no adverse findings that would prevent them from becoming close associates of The Star,” Crawford said.
At the same time, both NICC and the Queensland government have approved a proposal from Investment Holdings - an investment vehicle of the billionaire publican Bruce Mathieson - to increase its shareholdings in The Star.
According to the NICC, both Bruce Mathieson Snr and Bruce Mathieson Jnr have previously received close associate approval from the NICC.
“Both the close associate approvals and the major change approval for The Star will allow Bally’s and Investment Holdings to move forward with their financial and operational commitments in respect of The Star, which we anticipate will be happening very soon,” Crawford said.
“Bally’s and Investment Holdings have assured the NICC they will continue the essential remediation work required at The Star so that it can continue to remedy the serious concerns raised in the two Bell inquiries.”
In a statement to the ASX, The Star Entertainment Group chairman Anne Ward said the board is very pleased to have received all regulatory approvals necessary to complete the strategic investment.
“This is a critical step in The Star’s progress towards a return to suitability and financial stability,” Ward added.
“We look forward to working with each of Bally’s and Investment Holdings to facilitate an orderly transition and to provide a pathway for a successful future for The Star.”
The latest decision does not impact the current status of The Star’s licence in NSW, which remains suspended. NICC-appointed manager Nick Weeks also continues to oversee casino operations.
The entertainment giant also remains subject to remediation milestones and reporting outcomes relating to its anti-money laundering and counter-terrorism financing (AML/CTF) gambling harm, governance and culture uplift programs.
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