Bally's Corporation (NYSE:BALY) ("Bally's" or the "Company") today announced that it has entered into a binding term sheet with The Star Entertainment Group Limited (ASX: SGR) ("The Star") comprising a multi-tranche issuance of subordinated convertible notes and subordinated debt (together the "Notes") with an aggregate principal value of AUD $300 million (approximately USD $187 million1) (the "Transaction").

The Star is an ASX-listed, leading Australian entertainment and gaming company, operating casino and resort properties in Sydney, Brisbane and the Gold Coast. The Star employs approximately 8,000 team members while also supporting downstream employment and other opportunities in the communities in which it operates.

Bally's will invest in and partner with The Star and bring a proven track record of revitalising underperforming casino businesses.  Bally's will continue to work collaboratively with regulators and stakeholders to support a successful turnaround of The Star. Strategically, the Transaction is intended to preserve The Star's long-term potential, with Bally's committed to leveraging its operational expertise to deliver a more resilient and sustainable business for all stakeholders.

Soo Kim, Chairman of Bally's, said "This transaction provides Bally's the opportunity to infuse The Star with what it needs to regain its position as Australia's preeminent gaming destination.  And it allows The Star shareholders to share in what we confidently believe will be a brighter future together."

George Papanier, President of Bally's adds, "We are excited to bring our reputation and operating expertise to a wonderful set of properties that operate in fantastic markets.  We are up for the challenge."

Upon conversion of the Notes, Bally's would own up to ~56.7% of the fully diluted share capital of The Star assuming it subscribes for 100% of the Notes, noting that The Star's major shareholder, Investment Holdings Pty Ltd (which is controlled by the Mathieson family), may separately subscribe for a portion of the Notes, which would reduce Bally's' commitment by an equal amount.

The issue and conversion of certain tranches of Notes is subject to shareholder and regulatory approvals. The Star expects to hold a shareholder meeting in the coming months. In the interim a Bally's representative will join The Star board as an observer. Upon conversion of the Notes, additional and/or replacement directors will be appointed to ensure majority Board representation, subject to regulatory approvals.      

Transaction Details

Under the binding term sheet executed on 6 April 2025, Bally's will invest AUD 300,000,000 (approximately USD $187 million1) through a combination of subordinated convertible notes and subordinated debt, in two tranches (refer below).

The Notes are convertible into shares such that Bally's will own approximately 56.7% of The Star's fully diluted share capital post-conversion,

• Tranche 1 Notes:
  • Tranche 1A: Convertible into shares representing 9.71% of The Star's pre-issue capital
• AUD $22.3m (approximately USD $13.9m1)
  • Tranche 1B: Convertible into shares representing 4.85% of The Star's pre-issue capital
• AUD $11.1m (approximately USD $6.9m1)
  • Tranche 1C Subordinated Debt: Subordinated non-convertible debt
• Subordinated Debt of AUD $66.6m (approximately USD $41.5m1).  This amount may be increased in certain circumstances, including if regulatory approvals related to the issuance and conversion of the Tranche 2  Notes are not obtained within specified periods.
• Tranche 2 Notes: Convertible into shares representing 50.3% of The Star's pre-issue capital
  • AUD $266.6m (approximately USD $166.2m1) with the principal amount of the Trance 1C Subordinated Debt being applied to reduce the amount payable by Bally's on the issue of the Tranche 2 Notes.
• The conversion price is fixed at AUD 0.08 per share, with customary anti-dilution protections.
• The Notes mature on 2 July 2029, with automatic redemption of principal, accrued interest, and any outstanding payment-in-kind ("PIK") liability if not converted.
• Interest rate of 9.0% per annum, payable quarterly.

Funding Details and Approvals

Bally's has available funds to support the Transaction. The issuance and conversion of certain tranches of Notes is subject to receipt of shareholder approval, regulatory approvals, execution of long-form transaction documents and certain consents.

The binding term sheet is attached to this release.