Bally’s May Be Examining Star Entertainment Buy

• Bally’s could be among parties interested in Star Entertainment
• List of potential bidders for Aussie casino operator grows

Add Bally’s (NYSE: BALY. T) to the roster of “vultures” that may be hovering around the soon-to-be carcass that is Star Entertainment.

The regional casino operator is reported to have dispatched representatives to Australia last week to engage with Star officials and inspect the company's gaming venues. Citing unnamed sources familiar with the situation, The Australian Financial Review noted that a Bally’s delegation was recently in Australia meeting with Star executives, as well as creditors and equity investors. It is speculated that Soo Kim was included in that group. Kim is the founder of Standard General — the hedge fund that has recently acquired Bally’s.

Star’s assets encompass its flagship, namesake property in Sydney as well as The Star Brisbane and the Star Gold Coast. It is believed that Bally’s representatives toured that trio of casino hotels.

Bally’s, based in Rhode Island, currently does not operate physical gaming venues outside of the US. In this country, the company manages 19 casinos across 11 states and is in the process of constructing Chicago’s first integrated resort — the operator’s most expensive initiative to date.

Bally’s Joins Other US Firms Eyeing Star

Rumors regarding Bally’s supposed interest in Star come in anticipation of the Australian earnings report, set for release next week. Some analysts speculate that those results, which will encompass figures for the latter half of 2024, will paint a clearer picture of the operator’s capacity to endure as a going concern in the near term.

The general consensus among Star creditors seems to indicate that the gaming company stands little chance of survival and the likelihood of it repaying its AU$650 million in debt is low. Such circumstances frequently prompt takeover speculation and this is indeed the case with Star, with the rumor mill heavily favoring American stakeholders.

Recent reports suggest that private equity firm Blackstone (NYSE: BX) may show interest in acquiring Star, with the stipulation that it prefers to wait until Star is placed into administration by the Australian government, which would result in a lower purchase price.

Another US-based private equity firm is rumored to be engaged in discussions to assist Star in refinancing its $413. 40 million in liabilities. In late January, speculation arose that New York-based Cerberus Capital Management reached out to Star creditors about acquiring some of that debt at a reduced price, although the involved parties have not publicly addressed the matter. Star’s lenders include Barclays, Deutsche Bank, Soul Patts, and Westpac, among others.

Bally’s Could Be Credible Star Player

Given Star’s current market capitalization of $247 million and its debt standing at $413. 40 million, the gaming company’s enterprise value is estimated at $660. 40 million. With its shares declining and its near-term viability in question, it is conceivable that a prospective buyer would wield significant negotiating power.
In regard to funding a possible agreement for Star, Standard General has options available with Bally’s, which include the sale of property or its struggling online sports betting division. The regional casino operator has not indicated that it is open to either method to finalize a deal for Star.

Furthermore, it’s likely that if Star enters administration, not only might the acquisition cost decrease, but potential buyers could also acquire separate assets instead of the whole company.