Oaktree Offers $413 Million Lifeline to Cash-Strapped Star Entertainment
US-based Oaktree Capital Management has extended a lifeline to beleaguered Australian casino operator Star Entertainment, offering to refinance $413.40 million of its debt. This announcement has sent Star's shares soaring by 8.3% in Sydney trading.
Oaktree's offer would significantly dilute the stake of Star's current investors and position the asset management firm as a substantial future investor. The proposal is currently under consideration by Star, with no guarantees of acceptance.
Oaktree's approach comes amidst Star's urgent capital-raising efforts due to severe cash flow constraints. The company requires $150 million in subordinated debt to secure additional borrowings of $100 million.
Star has been grappling with multiple regulatory inquiries, declining tourist visits, and extended closures, challenges that have plagued Australia's casino industry for years. The firm has cautioned investors of ongoing operational challenges.
Portfolio manager Jesse Moors of Spatium Capital warns of potential liabilities for any entity acquiring control of Star, given its publicly exposed financial struggles. Oaktree is anticipated to negotiate aggressively, potentially diluting the holdings of current and new Star shareholders.
Star has outlined several conditions that must be met for Oaktree's offer to proceed, including a comprehensive security package, regulatory approvals, due diligence completion, and agreements with existing creditors.