Australia’s Star woos potential US refinancing lender with tour of its three integrated resorts

Australia’s Star Entertainment Group is said to have hosted senior executives from US-based WhiteHawk Capital Partners at its Australian integrated resorts as it looks to secure a AU$400 million (US$280 million) refinancing of the group’s debt.

Local media outlet the Australian Financial Review is reporting that the executives, including Whitehawk’s Managing Director Alex Zuckerman, visited the three Star properties last week – accompanied by recently appointed Star chairman Soo Kim – as they consider whether to sign a binding agreement. It is likely Star wanted the private credit firm to fully understand the scale and potential of the company it was lending to in order to secure the refinancing.

A deal before the end of this month is seen as crucial in avoiding a breach of the terms of its existing loan with a group of lenders, allowing it to focus its energies on other key areas of focus. These include an extensive cost-cutting exercise at Star’s corporate level, completing a deal with Hong Kong partners Chow Tai Fook and Far East Enterprises to offload its 50% stake in The Star Brisbane, and to prove to regulators that the company deserves to win back its casino license for The Star Sydney.

IAG understands Star will reduce the size of its corporate office from around 600 people to 150, with many of those set to depart having already been tapped on the shoulder.

Star recently received a waiver on covenants for the December reporting period from existing lenders, however the AFR report suggests the company has been forced to pay as much as AU$20 million (US$14 million) on its waivers to avoid a covenant breach.

While a refinancing package on better terms would alleviate such concerns, Star is still awaiting a Federal Court ruling on civil action brought by Australia’s financial crimes watchdog AUSTRAC for alleged breaches of AML laws that could result in a fine in the hundreds of millions of dollars. Rival casino operator Crown Resorts reached a AU$450 million settlement with AUSTRAC on similar allegations in 2023.

Soo Kim, whose company Bally’s Corp purchased a 38% stake in Star late last year, has previously stated that a fine of more than AU$100 million (US$70 million) would place Star’s future in peril.

In comments made during last week’s Regulating the Game conference in Sydney, AUSTRAC CEO Brendan Thomas acknowledged that Star was now under new ownership but said his agency could not ignore the sins of the past.

“[Star] has changed significantly since [the alleged breaches occurred],” Thomas said. “I won’t say too much about risk, but there’s a question about risk and whether risk is still there or not, but nevertheless if you read our statement of claim, you can see our allegations are incredibly serious. We allege that the amount of criminality that occurred in that business was exponentially huge and the severity of the criminality that took place was similarly huge.

“While it’s taking a long time, from our point of view as a legal regulator, we can’t turn a blind eye to that sort of egregious activity.”