Star Entertainment Group is weighing a $650 million debt financing offer from Oaktree Capital Management as the Australian casino operator faces serious financial uncertainty. With dwindling liquidity and ongoing restructuring efforts, the company is actively exploring solutions to stabilize its operations.
The casino operator recently disclosed its financial struggles, revealing that it had only $78 million in cash reserves as of December 31, 2024, after burning through a substantial portion of its funds. In an attempt to secure liquidity, Star has already divested assets, including the event space at its Sydney casino for $60 million. Additionally, the company has turned down several acquisition proposals for its 50% stake in Brisbane’s Queen’s Wharf precinct, though discussions remain ongoing.
Oaktree Capital Management, an American asset management firm, has stepped forward with an offer to refinance Star’s debt. According to an Australian Securities Exchange (ASX) filing, the proposal consists of two debt facilities totaling AU$650 million (US$413.3 million) over five years.
Despite this potential financial support, Star has acknowledged that even if the deal proceeds, it will require further funding before its implementation. The company continues to evaluate multiple liquidity solutions to prevent insolvency.
Terms and Regulatory Hurdles
The Oaktree proposal comes with several conditions. Approval is required from regulatory bodies in New South Wales and Queensland, as well as Star’s existing lenders. The deal also hinges on the completion of due diligence on specified matters, the execution of long-form financing documentation, and an inter-creditor agreement.
Star emphasized that it is considering the offer but made no guarantees about its acceptance or implementation. The company stated, “The Board of The Star will consider the proposal,” but added that there remains significant uncertainty regarding its ability to remain operational without securing additional liquidity.
Broader Implications and Future Outlook
Oaktree Capital has a history of engaging with the casino industry, having previously attempted to finance Crown Resorts before Blackstone’s acquisition in 2022. The firm is also a minority investor in Macau’s Studio City casino resort and controls gaming equipment supplier Interblock, which operates in North America, Europe, Australia, and Asia.
The Star’s financial troubles have been widely reported, with Sky News Australia Business Editor Ross Greenwood recently warning that the company was approaching a critical tipping point. He stated that sources had indicated Star could enter administration within a week if cash reserves were further depleted.
To address its liquidity concerns, Star has also sought other financial avenues. In December, the company raised $100 million as part of a $200 million two-tranche loan secured in September. However, accessing the remaining portion of this facility requires meeting strict conditions, including securing an additional $150 million in subordinated debt. Unlike this previous loan, the Oaktree offer does not require Star to raise subordinated capital or defer tax payments to state governments.
In a related move, Star recently confirmed receiving an acquisition offer for its stake in the Brisbane Queen’s Wharf precinct from Chow Tai Fook Enterprises and Far East Consortium International, both existing investors in the Destination Brisbane Consortium.
Despite these ongoing negotiations, the company remains in a precarious financial position. Star reiterated that “while discussions continue with respect to a range of different solutions, there is no certainty that any of these discussions or negotiations will result in one or more definitive arrangements that might materially increase the group’s liquidity position.”
