Oaktree Offers $413.8 Million Debt Financing to Star Entertainment

The Star Entertainment Group Limited, which is listed on Australian Securities Exchange (ASX), on Monday said that it has received a debt financing proposal from funds associated with Oaktree Capital Management providing $413.8 million.

In a bourse disclosure this morning, Star Entertainment said that the proposal includes a commitment letter and term sheet which set out terms upon which Oaktree would be willing to provide the funds in two debt facilities with a term of five years.

The proposal is subject to numerous conditions, including a comprehensive security package and inter-creditor documentation which requires consents from New South Wales and Queensland Governments and regulators, completion of due diligence in relation to specified matters, that the existing lenders enter a settlement and or refinancing agreement on terms satisfactory to Oaktree, the execution of long-form financing documentation and other conditions.

The proposal is not conditional on The Star raising subordinated capital nor any waiver or deferral of tax payable to State Governments. Oaktree is a US-based investor with more than $202 billion in assets under management.

Under an existing $127.32 million debt lifeline from lenders secured in October last year, The Star had to raise additional capital of at least $95.39 million to secure the second tranche of $63.66 million – a condition that the casino group failed to meet by the end of December last year. 

The Star’s Board will consider the proposal and there is no certainty that it will be progressed, that the conditions to the proposal will be satisfied, or that the proposal will be implemented. If The Star proceeds with the proposal, the Company will require additional funding for the period prior to the proposal being implemented.

Discussions Ongoing

While exploring possible liquidity solutions, the Group said that discussions were continuing with respect to a range of different solutions, there is no certainty that any of these discussions or negotiations will result in one or more definitive arrangements that might materially increase the Group’s liquidity position.

In the absence of one or more of those arrangements, there remains material uncertainty as to the Group’s ability to continue as a going concern, Star Entertainment added.

Oaktree’s proposal is a follow-up of an announcement made last week which said that The Star was considering selling its 50% interest in the 2.29 billion Queen’s Wharf development to its Hong Kong partners Chow Tai Fook Enterprises and Far East Consortium.