Casino ‘vulture’ set to rescue Star

Kim made his name with a hedge fund Standard General, which specialised in picking up distressed assets in regulated industries such as casinos, cannabis, tobacco and television – which led to it being labelled a vulture fund by rivals.

In a 2022 interview with Forbes, Kim said he hated the “sin” label put on the first three of these industries.

“Whether it’s cannabis, to a lesser degree nicotine, or gambling, these are things Americans want to do. And if they’re not allowed to do it, they’re still going to do it, it’s just going to be underground,” he said.

More recently, he spoke of his interest in Star.

We “don’t mind running into the proverbial smoking building”, Kim said in an interview after he visited Star’s assets in Australia and before Bally’s lobbed its offer.

He described the trip as a “mystery shopping” experience. He clearly liked what he saw, especially at The Star’s flagship Sydney casino.

“We’re almost struggling to understand why it’s performing so poorly,” he said.

Star has been embroiled in a spiralling financial crisis since last year as gambling revenue fell and regulatory costs mounted following a run of scandals – including revelations of facilitating money laundering and allowing organised crime to operate on its premises – which led to the loss of all three casino licences.

The move to cashless gaming in NSW (Queensland is to follow) is already eating into its lucrative poker machine revenue.

Bally’s appeared as a potential suitor for Star in March, just as Star was offloading its stake in the Queen’s Wharf casino resort in Brisbane to the Hong Kong-based Far East Consortium and Chow Tai Fook Enterprises – and took full ownership of property developments at the Gold Coast resort – in return for more than $50 million cash, which staved off administration.

Loading

Bally’s entered the frame when Star’s talks with investment company Salter Brothers, to secure a debt funding lifeline of as much as $940 million to provide the financing needed to secure its long-term future, fell through last week.

The unsolicited and conditional proposal from Bally’s, announced in March, involved the issue of convertible notes subordinated to The Star’s existing senior lenders.

But before that conversion can happen, Bally’s would need to receive Foreign Investment Review Board approval; receive probity approval from the state casino regulators in NSW and Queensland; as well as approval to own such a large stake in the casino operator.