8:00PM MAY 29, 2024NO COMMENTSCredit funds such as Apollo Global...

• 8:00PM MAY 29, 2024
• NO COMMENTS

Credit funds such as Apollo Global Management, Capital Management, Varde Partners and Centrebridge Partners have not given up on efforts to assert influence over Star Entertainment, as debt comes up for sale by its lenders.

Sources say that funds are circling for an opportunity to enter the scene as lenders in the business, buying loans at a discount.

Troubled casino operator Star has about $450m of debt, about $200m to $300m of which is with Barclays (the part owner of Star’s adviser, Barrenjoey) and Westpac.

Other lenders hold the remainder and some are believed to be keen to sell loans at a discount, leading to the interest from private equity firms like Apollo.

The lenders have made efforts to gain a seat at the table in the past through recapitalisation plans, but Star has instead opted to raise equity.

The challenge for a buyer right now is that they don’t know what they are acquiring, as the group’s casino licence is up in the air and the Bell II inquiry is to decide whether it is a fit casino operator.

As the regulator appears to be taking a dim view of how Star operates under its current management, the chances of some sort of change of control looks more likely.

With its market value at $1.37bn, Star is worth less than its property assets.

Investor Bruce Mathieson, who has been cleared from a probity perspective to own more of Star, has a 9.59 per cent holding.

He is considered to be in the box seat for any play with its $1.5bn-odd real estate portfolio.

And there’s not many big global funds which invest in casinos or would be in a position to pass a probity check.

A logical outcome is that a private equity firm with Mr Mathieson is a solution, where he may own Star’s Gold Coast and Sydney casino properties and an operator is also involved.

Crown’s owner, Blackstone, is being ruled out as a buyer of Star as the NSW government is making its preference clear for two casino operators, while large ritzy Las Vegas operators are likely to be less attracted to the Australian market operator Star with fewer high-roller gamblers.

Barrenjoey has advised Star, which raised equity twice last year – first raising $800m then $750m. Net debt last year stood at $596m.

Other investors which have been circling are Bain Capital, Brookfield and Soul Patts.

Star Entertainment has been fighting to maintain its casino licences in two states after having been probed by anti-money laundering agency Austrac, and has faced hefty fines and expensive undertakings as a result.