The Star Entertainment Group (ASX:SGR) has entered into a binding term sheet with Bally's Corporation for a $300 million multi-tranche convertible note and subordinated debt investment.
The funding aims to strengthen The Star's financial position, which is structured in two tranches.
Tranche 1, totalling $100 million, is expected by April 9, pending consent from senior lenders.
It includes $33.4 million in convertible notes—Tranche 1A and 1B, representing a combined 14.56% of The Star's pre-issue capital—and $66.6 million in subordinated non-convertible debt.
Tranche 2, worth up to $200 million, is subject to shareholder approval and regulatory consents and will see Bally's potentially holding a 56.7% fully diluted stake in the company post-conversion.
All notes carry a 9% annual coupon, payable quarterly in cash or kind, with a conversion price of 8 cents per share.
The instruments are unsecured and subordinated, with a maturity date of July 2, 2029.
The Star is in discussions with its largest shareholder, Investment Holdings, for a potential $100 million investment, which could reduce Bally’s commitment to $200 million.
The Star’s board unanimously supports the deal, subject to an independent expert confirming it is in shareholders’ best interests.
UBS is the financial adviser, and Allens is the legal counsel for the transaction.