Star Entertainment Group Ltd (ASX: SGR) shares remain frozen after the company released details of its takeover deal.
Subject to various approvals, US casino giant Bally's Corporation (NYSE: BALY) will buy a major stake in Star Entertainment for $300 million.
Bally's first made an offer a few days after Star Entertainment shares were suspended and the company announced a rescue plan.
Star Entertainment issued a statement on 10 March confirming receipt of the offer but forged ahead with its rescue plan instead.
News of the accepted takeover offer follows the withdrawal of a $940 million funding deal that was central to the rescue plan.
Details of the deal with Bally's
Star Entertainment has entered into a binding term sheet with Bally's for a $300 million takeover deal.
The deal will involve multi-tranche convertible notes and subordinated debt.
Under tranche 1 and subject to conditions, Bally's will pay Star Entertainment $100 million on or before 9 April (that's tomorrow).
Under tranche 2, Bally's will pay Star Entertainment $200 million, subject to conditions including shareholders' approval of the takeover.
Star Entertainment expects the tranche 2 payment will be made no later than October.
The casino operator announced it was also negotiating with its biggest shareholder, Bruce Mathieson, to kick in up to $100 million.
Star said it was discussing a "possible subscription" with Mathieson's investment company, Investment Holdings Pty Ltd.
If this goes ahead, Bally's investment would be reduced to $200 million.
When Bally's first made its unsolicited offer, it asked for a 50.1% controlling stake in Star Entertainment.
It is unclear whether Bally's will have this much of a stake once the takeover deal is finalised.
It will depend on how much Mathieson decides to invest.
In a separate statement, Bally's explained:
Upon conversion of the Notes, Bally's would own up to ~56.7% of the fully diluted share capital of The Star assuming it subscribes for 100% of the Notes, noting that The Star's major shareholder, Investment Holdings Pty Ltd (which is controlled by the Mathieson family), may separately subscribe for a portion of the Notes, which would reduce Bally's' commitment by an equal amount.
When will Star Entertainment investors vote on the takeover?
Star Entertainment hopes to dispatch a booklet to shareholders in late May and schedule a vote in late June.
The board intends to unanimously recommend the takeover proposal to investors, unless a better offer is made.
As usual, the takeover will be subject to an independent expert concluding it is in the best interests of shareholders.
Each board director intends to vote all of the Star Entertainment shares they own or control in favour of the deal.
Star Entertainment is preparing a booklet containing all the information and the board's reasoning for recommending the deal.
The Star Entertainment share price remains frozen at 11 cents for now.
Star Entertainment shares have lost 79% of their value over the past year.
When will Star Entertainment shares resume trading?
Star Entertainment is currently working to finalise its 1H FY25 report after accepting the takeover offer.
This is important because it's the reason Star Entertainment shares were suspended in the first place.
The ASX formally suspended Star shares on 3 March after the company missed its 28 February deadline to file the report.
When Star lodges the 1H FY25 report, it will be up to the ASX as to whether that will be enough for the resumption of trading.
Star Entertainment said:
Separately, the Directors are currently finalising The Star's financial accounts for the period ended 31 December 2024 and intend to lodge those accounts with ASX as soon as possible.
