Pub baron seeks green light to lift Star stake

Bruce Mathieson, the billionaire businessman who made his fortune in pubs, has formally asked the NSW casino regulator for permission to increase his stake in Star Entertainment, a clear signal of his long-term ambitions to gain a larger holding in the embattled wagering group.

Mr Mathieson emerged as an investor in the struggling casino operator in February, taking a 9.97 per cent stake as it prepared an extensive turnaround plan. A person familiar with Mr Mathieson’s plans said he wrote to the Independent Casino Commission, the regulator, shortly after acquiring that stake to ask for permission to lift his holding.

There is no guarantee that Mr Mathieson will increase his stake if he receives approval – it will depend on market conditions. Mr Mathieson declined to comment.

A spokesman for the casino regulator declined to comment, except to note that approval was needed for any investor to own more than 10 per cent of the company. That would make them a “close associate” under the regulations governing casino licensees in the state.

“The process will see the stakeholder undergo a probity assessment which interrogates their financial background and stability, their business dealings, and their character, among other things,” he said. “The assessment is rigorous, so depending on the particulars of the individual and their affairs, a probity assessment can extend for weeks or months.”

A close associate of a casino licence can be a company that holds the licence, a director, manager, secretary or executive officer working at or applying to work at a casino, or a person working at a body or applying to work for a company that is related to the casino. It also includes a person or body corporate that holds an interest of 10 per cent or more shares in the casino.

Mr Mathieson is not the only person to apply to be a close associate, but he is the largest shareholder to do so. Other recently appointed close associates including Star’s group chief control officer, Ravneet Townsend, and general manager of electronic gaming and cashier services, Peter Humphreys.

Mr Mathieson is one of the country’s wealthiest individuals, with a fortune of $2.13 billion, according to the Financial Review Rich List. He is also a major investor in Endeavour, the operator of pubs, hotels and bottle shops including the Dan Murphy’s and BWS chains.

When he acquired nearly 10 per cent of Star for $141.7 million in February, Mr Mathieson said he would be in an investor for “three decades”. “I can guarantee I’ll be there in 30 years. It’s a big long-term holding for my family,” he said at the time.

Mr Mathieson’s investment in Star came at a crucial moment for the embattled group, which was facing the prospect of a hefty NSW casino tax, four class actions and allegations by AUSTRAC it had breached anti-money laundering laws. In April, the group announced the possible sale of its Sydney casino and 500 job losses as it looked to save $100 million annually.

Star has enjoyed some respite since Mr Mathieson bought equity. The NSW government earlier this month scrapped a change that would’ve pushed the top tax rate for poker machines to more than 60 per cent, and the company is now attempting to refinance its debt.

Washington H Soul Pattinson is one party considering participating in the debt refinancing, and is expected to compete against a consortium led by distressed debt giant Oaktree Capital. The Australian Financial Review’s Street Talk column reported Soul Patts had discussed a tie-up with Mr Mathieson, but were waiting on details of a potential fine levied by the financial crimes watchdog. Star has provisioned for a $150 million penalty, while its rival, Crown Resorts, was fined $450 million.

Star shares closed at 99 cents on Monday, down 2.8 per cent. The company is expected to release its results on August 29. It expects underlying earnings before interest, tax, depreciation and amortisation of between $280 million to $310 million. That figure excludes the $150 million provision for fines, as well as costs, associated with regulatory reviews.