{"id":749,"date":"2025-04-08T06:03:20","date_gmt":"2025-04-08T06:03:20","guid":{"rendered":"http:\/\/www.chuckwardrealestate.com\/?p=749"},"modified":"2025-09-22T12:10:08","modified_gmt":"2025-09-22T12:10:08","slug":"ballys-star-deal-risky-more-capital-may-be-needed-says-cbre","status":"publish","type":"post","link":"http:\/\/www.chuckwardrealestate.com\/index.php\/2025\/04\/08\/ballys-star-deal-risky-more-capital-may-be-needed-says-cbre\/","title":{"rendered":"Bally\u2019s Star Deal Risky, More Capital May Be Needed, Says CBRE"},"content":{"rendered":"<ul>\n<li><strong>Bally\u2019s is shelling out nearly $150 million to save the Aussie casino operator<\/strong><\/li>\n<li><strong>Analysts say the transaction is fraught with risks for the buyer<\/strong><\/li>\n<\/ul>\n<hr \/>\n<p>News emerged late Sunday that Bally\u2019s (NYSE: BALY.T) is partnering with Australian businessman Bruce Mathieson to essentially save Star Entertainment Group in a deal valuing the battered casino operator at about $180 million &#8212; $149 million of which will be paid by Bally\u2019s. At least one research firm believes the acquisition carries risks for the buyer.<\/p>\n<figure id=\"attachment_337563\" aria-describedby=\"caption-attachment-337563\" data-style=\"width: 858px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" class=\"wp-image-337563 size-post-thumbnail-858xAUTO lazyload\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" alt=\"Bally\u2019s Twin River Lincoln, Edward Peduto, duty of care, negligence lawsuit\" width=\"858\" height=\"498\" data-src=\"http:\/\/www.chuckwardrealestate.com\/wp-content\/uploads\/2025\/04\/Ballys3-858x498-1.jpg\"><figcaption>A Bally&#8217;s casino in Rhode Island. The company may be biting off more than it can chew with Star Entertainment. (Image: Bally\u2019s Twin River Lincoln)<\/figcaption><\/figure>\n<p>Under the terms of the acquisition agreement, Bally\u2019s is infusing capital into Star via a convertible bond sale that will result in the Rhode Island-based regional casino operator controlling 56.7% of the Australian company. While the deal keeps with <a href=\"https:\/\/www.casino.org\/news\/star-entertainment-pressing-ballys-to-up-158m-takeover-bid\/\">Bally\u2019s acquisitive history<\/a>, CBRE analysts Colin Mansfield and Connor Parks point out the buyer\u2019s capital obligations to Star could just be getting started.<\/p>\n<blockquote class=\"main-blockquote\">\n<p>We believe the initial Bally\u2019s investment may be the first of multiple cash injections needed at Star and we are cautious around the ability to turn operations around,\u201d observed the analysts in a new report.<\/p>\n<\/blockquote>\n<p>Star is cash flow negative and <a href=\"https:\/\/www.casino.org\/news\/ballys-makes-11th-hour-bid-to-save-star-entertainment\/\">its cash burn rate<\/a> indicates the company was on death\u2019s doorstep before Bally\u2019s and Mathieson &#8212; Star\u2019s biggest shareholder &#8212; came to its rescue. Citing those weak financial conditions, the CBRE analysts said Bally\u2019s could be required to pony up more cash for Star in the future.<\/p>\n<h2>Star Could Be Distraction for Bally\u2019s<\/h2>\n<p>The CBRE analysts also argued that Bally\u2019s is using restricted cash to finance its deal for Star &#8212; a move that could raise eyebrows for some market observers who believe it would be preferable for Bally\u2019s to focus its expenditures on its <a href=\"https:\/\/www.casino.org\/news\/ballys-starting-demolition-at-site-of-permanent-chicago-casino\/\">Chicago casino hotel plans<\/a> and other US efforts.<\/p>\n<div class=\"callout\">\n<p>There\u2019s some merit in that line of thinking. Bally\u2019s credit rating <a href=\"https:\/\/www.casino.org\/news\/ballys-hit-with-credit-downgrade-on-chicago-casino-risk\/\">was recently downgraded<\/a> deeper into junk territory by Fitch Ratings, with that research firm citing Chicago-related risks. The operator\u2019s <a href=\"https:\/\/www.casino.org\/news\/ballys-wants-property-tax-discount-on-chicago-casino\/\">$1.7 billion Chicago integrated resort<\/a> is its most expensive project to date.<\/p>\n<\/div>\n<p>Given Star\u2019s spate of regulatory woes in Australia, as well as the possibility of Bally\u2019s needing to inject more cash into the Aussie operator, it\u2019s possible that an opportunistic-looking deal turns into a burden, and one that may not escape the scrutiny of Bally\u2019s creditors.<\/p>\n<p>\u201cWe believe the investment could also be a distraction as Bally balances a list of near-term variables, diverting management attention away from domestic priorities,\u201d adds the CBRE duo. \u201cAn accumulation of assets outside the restricted group is also concerning when considering Bally\u2019s\u2019 high restricted group leverage and distressed trading prices of its term loan B and unsecured notes (the latter of which have already organized via cooperation agreement). We think the possibility that term loan lenders formally organize will increase as a result of this transaction.\u201d<\/p>\n<h2>Star Buy Jibes with Bally\u2019s History<\/h2>\n<p>Risks aside, the pending acquisition of Star meshes with Bally\u2019s track record of buying what it perceives as undervalued or unloved casino assets &#8212; a playbook <a href=\"https:\/\/www.casino.org\/news\/ballys-chicago-deal-could-be-playbook-for-tropicana-las-vegas\/\">the operator has deployed<\/a> from Atlantic City to Las Vegas.<\/p>\n<p><strong>Bally\u2019s experience working with various state regulators in the US could pay dividends as it works through Star\u2019s Australian regulatory woes.<\/strong><\/p>\n<p>\u201cWe think Bally\u2019s views the Star assets as an opportunity to come in at a modest capital investment but participate in the upside should things improve,\u201d noted the CBRE analysts. \u201cTheir background in operating gaming in heavily regulated jurisdictions in the US should help in solving ongoing regulatory issues at Star.\u201d<\/p>\n<p>The post <a href=\"https:\/\/www.casino.org\/news\/ballys-star-deal-risky-more-capital-may-be-needed-says-cbre\/\">Bally\u2019s Star Deal Risky, More Capital May Be Needed, Says CBRE<\/a> appeared first on <a href=\"https:\/\/www.casino.org\/news\">Casino.org<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bally\u2019s is shelling out nearly $150 million to save the Aussie casino operator Analysts say the transaction is fraught with risks for the buyer News emerged late Sunday that Bally\u2019s (NYSE: BALY.T) is partnering with Australian businessman Bruce Mathieson to essentially save Star Entertainment Group in a deal valuing the battered casino operator at about $180 million &#8212; $149 million [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":751,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[12],"tags":[],"_links":{"self":[{"href":"http:\/\/www.chuckwardrealestate.com\/index.php\/wp-json\/wp\/v2\/posts\/749"}],"collection":[{"href":"http:\/\/www.chuckwardrealestate.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.chuckwardrealestate.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.chuckwardrealestate.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.chuckwardrealestate.com\/index.php\/wp-json\/wp\/v2\/comments?post=749"}],"version-history":[{"count":2,"href":"http:\/\/www.chuckwardrealestate.com\/index.php\/wp-json\/wp\/v2\/posts\/749\/revisions"}],"predecessor-version":[{"id":752,"href":"http:\/\/www.chuckwardrealestate.com\/index.php\/wp-json\/wp\/v2\/posts\/749\/revisions\/752"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.chuckwardrealestate.com\/index.php\/wp-json\/wp\/v2\/media\/751"}],"wp:attachment":[{"href":"http:\/\/www.chuckwardrealestate.com\/index.php\/wp-json\/wp\/v2\/media?parent=749"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.chuckwardrealestate.com\/index.php\/wp-json\/wp\/v2\/categories?post=749"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.chuckwardrealestate.com\/index.php\/wp-json\/wp\/v2\/tags?post=749"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}