Star Entertainment Group Ltd (ASX: SGR) shares remain frozen after the company announced a proposed financial rescue plan after the market close on Friday.
On Monday, the Australian Financial Review (AFR) also reports that Star Entertainment has received an offer from American casino giant Bally's Corporation to buy a 50.1% stake.
Let's go over what's happened.
Star Entertainment shares still on ice amid Brisbane exit
Star Entertainment announced a proposed financial rescue plan that includes selling its 50% stake in Queen's Wharf in Brisbane to its joint venture (JV) partners in Hong Kong.
The company has entered into a binding heads of agreement (HoA) to sell its stake in development, reportedly worth $3.6 billion, for just $53 million.
However, the deal also means Star Entertainment will not have to fund an anticipated $212 million equity contribution plus any other contribution that may have been required to help refinance $1.4 billion of debt by December.
There is also a potential future earn-out of up to $225 million.
Star's JV partners will also buy Star's Treasury Hotel and two car parks in Brisbane.
This means Star Entertainment will no longer own any assets in Brisbane.
'Consolidation' on the Gold Coast
As part of the deal, Star will acquire the JV partners' interest in the Dorsett and Andaz hotels at The Star Gold Coast. This will give Star full ownership of both assets.
Star said it "believes there are several benefits by consolidating its position on the Gold Coast …". These include the rights to further develop the 6.7-hectare site.
Star's JV partners have already paid The Star $35 million under the HoA.
They will pay another $10 million before the end of March. Another $8 million will be paid at the earlier of the Andaz completion, due in the second half of this year, or 30 November.
The parties are aiming to begin long-form documentation on the deal by 30 April.
Bridge loan and debt refinancing proposal in the works
Star Entertainment intends to use the proceeds of the Queen's Wharf sale for short-term liquidity while it tries to secure a bridge loan and debt refinancing package.
Star announced it has entered into documentation for a senior secured $250 million bridge facility with global investment firm King Street Capital Management.
Subject to conditions, the bridge loan would be available to be drawn until 29 April.
Star Entertainment has also entered into an exclusivity and process deed with another lender for a five-year refinancing deal that could provide up to $940 million of new debt capacity.
This would be enough to refinance all of Star Entertainment's corporate debt.
The lender is now undertaking further due diligence enquiries. It has a deadline of 18 March, with a seven-day extension available if required.
Star management warned:
There is no certainty that the Refinancing Proposal will be progressed, that the conditions to the Refinancing Proposal will be satisfied, or that the Refinancing Proposal will be implemented.
There has been no progress on a previous refinancing proposal from Oaktree Capital Management.
Even if this all pans out, the company still needs further short-term liquidity to continue operating. Star said it was pursuing various initiatives in this regard.
In relation to the sale of The Star Sydney events centre, the company said it had commenced long-form documentation on the $60 million deal and hopes to finalise it today.
US casino giant throws a spanner in the mix
The AFR reports today that Star Entertainment has received a $250 million recapitalisation offer from Bally's Corporation for at least a 50.1% stake in the company.
In a letter sent to the Star Entertainment board, Bally's said it was "very open to discussing a larger transaction".
Bally's owns and operates 19 casinos in the US.
In the letter, Bally's said:
Our strategy for Star is built on the simple premise that keeping in place Star's current businesses, assets and platforms will provide a stronger and more successful business over time.
While we understand the rationale for Star's recently announced transactions, we believe that our proposal offers Star and its stakeholders far greater value and operational flexibility, as well as the upside from retaining Star's current projects and other assets.
The company has not lodged any statements with the ASX regarding the reported offer.
Star Entertainment shares snapshot
Star Entertainment shares were suspended last week after the company failed to lodge its 1H FY25 report.
Stock in Star Entertainment has crumbled by 79% over the past 12 months.
The casino operator has fallen out of the S&P/ASX 200 Index (ASX: XJO) in S&P Dow Jones' latest rebalancing.
