Star Entertainment Group Ltd (ASX: SGR) shares remain frozen amid news that funding talks with Salter Brothers have collapsed.
Here's what is happening.
Star Entertainment fails to secure new funding deal
Star Entertainment has announced that a refinancing proposal with Salter Brothers Capital has now been withdrawn.
The proposal had the potential to provide Star Entertainment with a total debt capacity of up to $940 million.
This would have been sufficient liquidity to refinance all of its existing debt.
As we've previously reported, the proposal was part of a broader financial rescue plan that management has been working on.
The plan involves four elements.
The first is Star Entertainment selling its 50% stake in Queen's Wharf in Brisbane. This part of the plan is already underway.
The second is a $250 million bridge loan through King Street Capital Management.
The company announced on 7 March that it had entered into documentation for the debt facility, and we've heard nothing further since.
Star Entertainment needs to satisfy conditions before it can access the funds. The bridge loan is available to be drawn until 29 April.
The third was the proposed five-year funding deal with Salter Brothers Capital.
The fourth is the pursuit of various other short-term liquidity options. This is necessary because neither the bridge loan nor the funding proposal would be available in time to address the company's immediate liquidity requirements.
Why did funding talks collapse?
The casino operator said negotiations with Salter Brothers had broken down because it could not meet various proposed conditions.
Star Entertainment said:
The withdrawal of the Refinancing Proposal follows extensive engagement by The Star with Salter Brothers Capital and relevant third parties, including State Governments and regulators.
As a result of that engagement, it became apparent that it was unlikely that a number of the conditions precedent to the Refinancing Proposal would be able to be satisfied, either at all or in sufficient time to address the current liquidity needs of the Company.
In particular, lender requirements for specific priority arrangements and enforcement rights in relation to their proposed security over non-gaming assets of The Star could not be met.
What now for Star Entertainment shares?
Star Entertainment remains unable to lodge its 1H FY25 report, which is why the shares were suspended from trading last month.
So, the stock will remain frozen at 11 cents per share for now.
The casino operator was due to file the report with the ASX by 28 February.
At the time, the company explained that it could not do so because it needed more liquidity to finalise the report.
It also admitted there was "material uncertainty as to the Group's ability to continue as a going concern".
Star Entertainment reiterated that today.
In its statement, Star said:
The Company continues to be unable to lodge its half year financial report for the period ended 31 December 2024 in the absence of an appropriate refinancing solution.
The Company continues to explore liquidity solutions that might materially increase the Group's liquidity position in the medium
term, including engaging with Bally's Corporation in relation to the proposal received on 10 March 2025.However, there remains material uncertainty as to the Group's ability to continue as a going concern.
Will the casino operator sell to Bally's?
A few days after Star Entertainment shares were suspended and the company announced its proposed rescue plan, US casino giant Bally's Corporation lobbed an unsolicited funding offer for a controlling stake in the company.
Star Entertainment issued a statement on 10 March confirming receipt of the proposal and that it would consider its merits.
There has been no further news on the Bally's offer since.
Last week, we learned that the NSW and Queensland regulators have given Star Entertainment more time to get its house in order before reconsidering its suitability to have a casino licence.
The Queensland Government has deferred the suspension of The Star's casino licence until 30 September.
In NSW, the Independent Casino Commission (NICC) has extended the suspension of The Star's licence until at least 30 September.
Star Entertainment shares have lost 79% of their value over the past 12 months.
