Ailing casino operator Star Entertainment’s rescue efforts have taken a new twist, after the company received a fresh offer from a US gambling firm led by New York hedge fund manager Soo Kim. Kim, known for acquiring distressed casinos, has proposed an alternative plan to help the struggling Australian company.
Star avoided collapse last Friday by signing a deal to sell its 50 percent stake in the Queen’s Wharf casino resort in Brisbane to Hong Kong-based Far East Consortium and Chow Tai Fook Enterprises. The agreement, worth $53 million, allows Star’s partners to take full ownership of the venue while providing Star with much-needed funds.
However, on Monday, Star disclosed a rival rescue proposal from US-based gambling giant Bally’s Corporation, which is chaired by Soo Kim. Star’s board will review the unsolicited, non-binding proposal but has not yet confirmed whether it will proceed with discussions.
Bally’s Alternative Rescue Plan
Bally’s has proposed injecting a minimum of $250 million into Star by March 28, positioning itself as an alternative to the Queen’s Wharf deal. The company claims this funding would help Star secure long-term financial stability and protect nearly 9,000 jobs across New South Wales and Queensland.
Under the proposal, Bally’s would underwrite a capital raising of at least $250 million via convertible notes, which would be converted into at least 50.1 percent of Star’s shares. Kim stated that Bally’s is open to discussing an even larger transaction, potentially leading to greater control over Star’s operations.
Who is Soo Kim?
Soo Kim, the founder of New York-based hedge fund Standard General, has a track record of acquiring struggling casino businesses. His firm manages $US1.5 billion in assets and specializes in turning around financially distressed companies.
Born in Seoul, South Korea, Kim moved to Bayside, Queens, where he learned English by watching television. Over the years, he has built a growing gambling empire, carefully selecting investment opportunities in debt-laden or bankrupt casino companies.
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“Whenever there is a troubled casino company, we get calls. We’re in a small group of people that don’t mind running into the proverbial smoking building—we’re corporate firemen,” Kim said in an interview with Inside Asian Gaming.
Kim was in Sydney in mid-February assessing whether Star’s casinos could be a good fit for Bally’s. While acknowledging that Australia is a new market for Bally’s, he said the company was now in a position to consider global opportunities after completing a recent acquisition.
Star’s Financial Challenges
Star’s financial difficulties stem from multiple factors, including the cost-of-living crisis, increasing regulatory scrutiny, and a looming fine from Australia’s financial crimes regulator. Analysts estimate the penalty for breaching anti-money laundering laws could be as high as $330 million, further complicating the company’s efforts to regain financial stability.
On Friday, Star also secured a $250 million bridging loan from US investment firm King Street Capital Management, providing temporary relief until the end of April. The company is currently exploring additional financing options to secure up to $940 million in debt capacity.
Regulatory Hurdles and Shareholder Concerns
Any potential deal with Bally’s would require regulatory approvals, including clearance from Australia’s Foreign Investment Review Board (FIRB). Given Star’s troubled history and the strict oversight of the Australian gaming industry, obtaining these approvals may be challenging.
Pubs billionaire Bruce Mathieson, Star’s largest shareholder, declined to comment on the Bally’s approach, stating that he had not yet reviewed the proposal. Meanwhile, Star’s shares remain suspended from trading, last recorded at 11 cents per share.
The Future of Star Entertainment
Star’s board faces a critical decision—whether to proceed with the Queen’s Wharf transaction, consider Bally’s proposal, or explore alternative financing options. While the Bally’s deal offers long-term potential, it also introduces uncertainty due to regulatory barriers and the risk of foreign ownership concerns.
As Star battles to avoid administration, its future remains uncertain. The company must act swiftly to secure financial stability, rebuild investor confidence, and navigate the regulatory landscape. Whether Bally’s proposal is the right path forward remains to be seen, but one thing is clear: Star’s survival depends on bold and decisive action in the coming weeks.
