Star Entertainment's Banking Dispute Delays Bally's Corporation Deal

Star Entertainment's banking dispute has delayed Bally's Corporation deal, delaying the release of the company's financial results. Bally's, which injected $300m into Star, will need to pass a financial suitability test to satisfy gaming regulators in NSW and QLD. The American company has significant debt liabilities and liquidity issues, which may hinder its plans to turn around Star's loss-making operations.

Star Entertainment Group's ongoing banking dispute has led to a significant setback, delaying Bally's Corporation's deal and the release of the company's financial results. The dispute involves the terms proposed by lenders for covenant waivers, which Star has declined as unacceptable amid ongoing financial strain [1].

The Australian Financial Review reports that lenders have expressed reluctance to grant waivers that would allow Star to breach conditions tied to a $430m loan. Negotiations remain underway with the SFA lender group to secure a compromise, as per a filing by Star with the Australian Securities Exchange [1]. Star's decision adds pressure on the company, which is already dependent on support under its Senior Facility Agreement (SFA), a key financing arrangement that underpins its operations.

The unresolved covenant issue now looms as a potential obstacle to meeting reporting deadlines. Star plans to submit unaudited results for the financial year ended 30 June 2025 to the Australian Securities Exchange on 29 August. It aims to file audited accounts by 30 September, provided that an agreement with lenders is reached in time [1]. The lodging of audited financial statements is regarded as a salient requirement, both to satisfy regulatory obligations and to uphold market confidence. A failure to deliver on schedule could exacerbate investor concerns and attract additional scrutiny.

Bally's Corporation, which injected $300m into Star, will need to pass a financial suitability test to satisfy gaming regulators in NSW and QLD. The American company has significant debt liabilities and liquidity issues, which may hinder its plans to turn around Star's loss-making operations. The deal, which was expected to provide Star with much-needed capital, is now on hold due to the banking dispute [1].

The outcome of these talks is expected to directly influence the company’s ability to complete its financial reporting for the year and could have broader implications for Star's financial trajectory. Star must adroitly balance its lenders’ demands with operational sustainability, as the terms attached to any waiver or alternative funding could influence the group’s ability to stabilize its business [1].

Star’s management has stressed its commitment to securing an outcome that aligns with both creditor expectations and the company’s financial needs. The group continues to navigate a challenging environment shaped by regulatory inquiries, heightened compliance costs, and declining revenues in key markets [1].

Whether negotiations result in covenant relief or a new financing arrangement, the resolution is expected to be pivotal in determining the company’s financial trajectory for the remainder of 2025 and beyond.

References:
[1] https://next.io/news/investment/star-entertainment-fighting-lenders-over-loan/