Under the terms of the deal, Rhode Island-based Bally’s and Star’s largest investor, Bruce Mathieson, would inject fresh funds to keep Star afloat. The casino operator has already received $100 million as part of the agreement. The deal is subject to shareholder and regulatory approvals.
Star, which employs 8000 staff across NSW and Queensland, revealed this week that it was on the verge of calling in administrators before the Bally’s rescue deal came into the picture. The company, once worth more than $5 billion, now has a market value of $287 million.
‘I think it is too early days for us to say, hey, we just can’t compete without help.’
Bally’s chairman Soo Kim
Releasing its long-delayed financial accounts on Tuesday, the casino operator said that revenue across all its operations was sliding as pubs and clubs kept picking up a greater share of punters.
Star reported a net loss of $302 million for the December half-year, including $166 million in significant items that included a writedown of the value of its Brisbane casino, which is being sold to its partners in the precinct – Far East Consortium and Chow Tai Fook Enterprises.
Star’s chief executive, Steve McCann, said this week that while poker machine revenue was continuing to rise across NSW and Queensland, the casino operator was not benefiting from it because of tighter regulations.
“The ongoing impact of regulatory reforms, the impact of mandatory carded play, cash limits, time limits, and our loss of market share across the Sydney and Gold Coast properties has had a material impact on the business, and we are continuing to operate through very challenging conditions,” he said.
Pubs and clubs are not subject to the card-only gambling and stricter know-your-customer requirements that are being implemented across Star’s casinos.
Kim said on Friday that Star’s current numbers did not fully reflect the “economic potential” of its assets.
“We are willing to put our money where our mouth is and try to see if we can’t impact the operations and improve it so these assets do achieve their potential.”
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While Star’s fortunes have been hamstrung by stricter regulations, Kim said Bally’s was not interested in running to the respective state governments to ask them for regulatory relief.
“I think it is too early days for us to say, ‘hey, we just can’t compete without help’,” he said.
“My position is, give us a chance to maximise these assets, to find the right business that meets the market today, which, we think, is plenty.
“After we give it our all, we will be in a position to say whether it’s unfair and we need help.”
With Colin Kruger
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