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Initially, Bally’s offered to contribute at least A$250m of the total amount. However, Star’s new filing shows that Bruce Mathieson’s Investment Holdings Pty Ltd has agreed to invest A$100m, thereby reducing Bally’s contribution to A$200m.

Under a binding term sheet signed on 7 April, Bally’s and Star entered into a multi-tranche investment agreement involving a combination of subordinated debt and convertible notes.

These financial instruments will be issued in two tranches, with the first totalling A$100m and the second accounting for the remaining A$200m.

The investment terms include a fixed 9% annual interest rate, payable quarterly, while the notes will be convertible at a price of A$0.08 per share, subject to customary adjustments.

Tranche 1 comprises A$22.3m in Tranche 1A Notes, A$11.1m in Tranche 1B Notes, and AU$66.6m in subordinated debt.

These instruments are unsecured and subordinate to Star’s existing senior debt. The Tranche 1 investment is scheduled for issue on or before today (9 April), pending lender consent.

In this initial tranche, Mathieson’s Investment Holdings will take over the full subscription of Tranche 1B Notes and a pro-rata portion of the subordinated debt.

With Investment Holdings committing A$100m, Bally’s contribution adjusts accordingly, decreasing its total financial commitment to A$200m.

Both parties’ investments will remain under the same terms set out in the agreement, and the overall size of the transaction remains unchanged at A$300m.

The second tranche of A$200m remains contingent upon several conditions, including shareholder approval, Foreign Investment Review Board clearance, and casino regulatory approvals in New South Wales and Queensland.

If approved, the Tranche 2 Notes could convert into equity representing 56.7% of Star’s share capital on a fully diluted basis, which has significant implications for the company’s ownership structure.

Star board to undergo multiple changes

On the governance front, the agreement also outlines expected changes in Star’s board composition and executive roles.

Both Mathieson and Kim are to be appointed as board observers during the transition. Following shareholder approval, David Curry and Con Nikitas are expected to assume operational roles at The Star, subject to regulatory checks.

If the notes are converted, it is anticipated that Bally’s, and potentially Mathieson’s Investment Holdings, would gain majority representation on Star’s board.

Star added that it is planning to hold a shareholder meeting in late June during which investors will be able to vote on the proposed transaction.

In addition, the company’s board is in the process of completing its financial statements for the six-month period ending 31 December 2024, and aims to submit the finalised accounts to the ASX shortly.

Sydney Event Centre sale complete

In parallel to the investment deal, Star has completed the divestment of its Sydney Event Centre and surrounding spaces to Foundation Theatres for A$60m.

The funds were initially held in escrow and have now been released to Star following approval from the New South Wales Independent Casino Commission (NICC).

However, NICC has imposed a condition that A$58.1m of the proceeds remain in escrow until shareholders approve the new A$300m strategic investment.

Should shareholder approval not materialise, the funds may only be accessed if Star meets certain financial viability requirements.

Star plans to dispatch an information booklet regarding the transaction to shareholders by late May 2025, with a vote expected in late June.

The convertible notes tied to the second tranche may then be formally issued following shareholder and regulatory approvals.

According to a note filed with the ASX, up to 3.75 billion new securities will be issued under the investment plan, with the initial tranche falling within Star’s current placement capacity and the remainder pending approval.

Overall, this restructuring and recapitalisation initiative aims to stabilise Star’s financial position and reconfigure its shareholder structure amid ongoing regulatory scrutiny and strategic shifts.