. Analysts reckon the casino owner could be in breach of bank covenants, which dictate the maximum amount of debt it may carry relative to its earnings, given what’s happened to its earnings.
Star’s problems include operating restrictions at its flagship casino in Sydney and increased competition in Sydney. It has also been in talks with the NSW government about proposed changes to casino duty rates which, in the current proposed form, would hit earnings further.As an interim measure, Star announced an “urgent review” of its flagship Sydney casino’s operating model and assets.
A Star spokesman declined to comment on any talks with Oaktree or other funding options on Tuesday. Sources said the board had yet to agree to anything, but was keen to consider all options.It’s not surprising to see Oaktree pop up with a proposal at Star. The group previously stalked James Packer’s stake in, before Crown was sold to US private equity group Blackstone.Louie Douvis
Oaktree also has form in the gaming sector offshore, having acquired poker machine developer Interblock last year, and previously owned gaming groups JAny move would have to be structured carefully to comply with regulations. No shareholder can have more than a 10 per cent stake without written consent of the NSW Independent Liquor and Gaming Authority and of the Queensland minister, for example.
co-edits Street Talk, specialising in private equity, investment banking, M&A and equity capital markets. He has 10 years' experience as a business journalist and worked at PwC, auditing and advising financial services companies.