Star Entertainment’s Search for Liquidity Continues as Salter Brothers Deal Falls Through

The Star Entertainment Group’s financial woes continue as its negotiations with Salter Brothers Capital fall through. The latter company had expressed interest in financing the Australian operator’s debt but has seemingly withdrawn the deal.

The Deal Fell Through

Just when things were beginning to look better for Australia’s embattled Star Entertainment Group, the company announced that the refinancing proposal it mentioned in ASX releases on March 7, 11, and 25, has been withdrawn.

According to the company, Salter Brothers Capital never sent a binding debt commitment letter to the operator and instead opted to withdraw its proposal.

The Star has continued to work diligently with Salter Brothers Capital in relation to the Refinancing Proposal but has not received a binding debt commitment letter and the Refinancing Proposal has now been withdrawn.

Star Entertainment statement.

If the negotiations were successful, Salter Brothers Capital would have provided the casino and hospitality group with sufficient liquidity to refinance all of the group’s existing debt.

Certain Conditions Could Not Be Met

As mentioned, Star Entertainment has been negotiating this agreement for weeks now. During that time, the company engaged with Salter Brothers Capital, as well as with relevant third parties, such as the Australian government and state regulators.

These engagements, however, suggested that a number of conditions precedent to the refinancing proposal would not be able to be satisfied, either at all or in a timely manner.

In particular, lender requirements for specific priority arrangements and enforcement rights in relation to their proposed security over non-gaming assets of The Star could not be met.

Star Entertainment statement

The company added that in the absence of an appropriate refinancing solution, it will continue to explore other sources of liquidity. The company suggested that it will now address Ball’s Corporation’s proposal, which it received on March 10.

However, the group emphasized that there is still significant material uncertainty as to the group’s ability to continue operating.

The Search for Liquidity Continues

Star Entertainment’s woes began with a regulatory probe that uncovered multiple instances of negligence and non-compliance, prompting significant scrutiny of its business. The company was penalized and forced to adopt a variety of remediation measures, lest it lost its license for good.

However, Star Entertainment’s remediation measures have so far yielded mixed results, spelling further trouble for the company and potentially putting its licenses in peril.

To make matters worse, an announcement in December highlighted a drastic decline in available cash, spelling some serious trouble for the operator. Since then, the company has been exploring a variety of ways to generate liquidity. To that end, the company began selling non-core assets, such as its Queen’s Wharf property, The Star Sydney Event Center, and other additional spaces within The Star Sydney complex.