Bally's Chairman Soo Kim talks after deal sealed to acquire Australia's Star Entertainment

Summary

In a candid conversation with Sue Kim, chairman of Bales, he discusses the company’s investment strategy in Star, a publicly traded company currently suspended from trading. Bales has increased its investment to $300 million, aiming to secure a majority stake and turn the company around. Sue Kim emphasizes transparency, shareholder engagement, and optimism for the company's recovery, despite the challenges it faces. He highlights the importance of working closely with shareholders to rebuild value, particularly for those who have seen a significant loss in the company's value.

Takeaways

• 😀 Sue Kim is leading efforts to rebuild the financial stability of Star Entertainment following its significant loss in stock value.
• 😀 The company's current equity holding is limited to 9.9%, pending shareholder approval for a potential increase beyond that threshold.
• 😀 The company initially planned to invest $250 million but later increased this to $300 million after the company requested more funds.
• 😀 The raised funds are divided into a mix of convertible and non-convertible notes, with plans to convert the debt to equity once shareholder approval is granted.
• 😀 Once the shareholder vote happens, the company's equity stake could grow to 56%, exceeding the initial target of 50%.
• 😀 Sue Kim emphasizes transparency and open communication with shareholders and the public, which is crucial for the company's recovery.
• 😀 Despite current challenges, there is optimism about the company's future and a strong commitment to regaining lost value for shareholders.
• 😀 The company is operating as a public entity, even though its stock is currently suspended from trading, with no plans to remove this status.
• 😀 The financial structure involves both debt and equity to navigate regulatory limitations, and the hope is to eventually convert debt into equity once approval is secured.
• 😀 The key to rebuilding value will be the support of shareholders, with Sue Kim believing that even starting from a smaller stake can help recover significant value over time.
• 😀 Sue Kim's approach is rooted in actively engaging with the community and shareholders, which is seen as rare and beneficial in the Australian casino industry.

Q & A

What is the main focus of the discussion in the transcript?

The main focus is on the financial situation of the company, particularly regarding equity investment, debt, shareholder approval, and the potential recovery of shareholder value.

What was the total equity investment mentioned in the conversation?

The total equity investment mentioned was initially $233 million, with an additional $66 million expected to follow after shareholder approval, bringing the total to $300 million.

Why is there a restriction on equity ownership in the company?

There is a restriction because the company is not allowed to have equity or securities that convert into equity exceeding 9.9% until it receives both property and shareholding approval.

What will happen after the shareholder approval is obtained?

Once shareholder approval is received, the company can convert all shares beyond the 10% and 20% limits up to 51%, and the remaining $66 million will be allocated to equity.

What is the purpose of the subordinated piece of paper mentioned in the conversation?

The subordinated piece of paper refers to a debt instrument that is behind the current debt but ahead of the equity holders, as the company was not allowed to take equity at that time.

How does the interviewee describe the equity deal in terms of percentages?

The interviewee explains that the initial investment of $233 million leads to a 56% ownership in the company, which is higher than the initially planned 50%.

What was the original offer for the equity investment?

The original offer was for $250 million, but the company requested more funding, which led to the final $300 million offer.

What is the importance of shareholder approval in the equity investment process?

Shareholder approval is critical because it will allow the company to convert equity and securities, enabling further investment and restructuring of ownership stakes.

What does the chairman hope to achieve in terms of company recovery?

The chairman hopes to recover value for shareholders and turn the company around, emphasizing the responsibility of leadership and the potential for revitalizing the company's future.

What is the current status of the company in terms of public trading?

The company is currently suspended from trading, but there are plans for the shares to potentially start trading again once the accounts are presented.