Australian casino operator The Star Entertainment Group Ltd., or The Star,
announced to the ASX today, Sept. 25, that its lenders have executed a commitment letter for a new debt facility of up to 200 million Australian dollars ($137.46 million) in two-tranches.
The all-in coupon for the new facility is 13.50% per annum (assuming cash pay is elected), and the existing AUD 300 million term facility has been repriced to this level, the announcement states. The maturity date is consistent with the existing term loan (December 2027). The Group will also retain up to AUD 34 million of bank guarantees under the existing revolving credit facility.
The company has the flexibility to capitalize a component of the interest at its election and there is a reduction in the coupon subject to the group’s adjusted net leverage ratio falling below 4.0x, according to the announcement.
The Star’s lenders have agreed to provide covenant waivers for the next two testing dates, being Sept. 30, 2024 and Dec. 31, 2024, with the waiver for the latter date being subject to execution of long-form documentation for the new debt facility and other customary conditions.
The company’s existing AUD 450 million facility has been reduced to AUD 334 million which is fully drawn, the announcement states.
The new facility comprises two tranches of AUD 100 million each. The first tranche is expected to be available to be drawn, subject to conditions precedent, from the end of October 2024 through to Dec. 20, 2024.
The first tranche is subject to certain conditions precedent being met, including:
- the provision of unsecured guarantees from some of the Group's regulated entities and enhanced security granted to lenders;
- regulatory consents and government approvals as required for guarantees and enhanced security for the lender group;
- the establishment of a disposal proceeds account with a credit balance of an amount representing the net proceeds of the sale of the Treasury Brisbane casino building and any other non-core asset proceeds completed before the draw down; and
- other customary conditions precedent.
The second tranche is subject to more extensive conditions precedent but, if satisfied, would be expected to be available to be drawn from the end of December 2024 and have a four-month availability period following the drawing of the first tranche.
The conditions precedent for the second tranche drawdown include:
- the receipt of required regulatory consents and finalization of documentation for the granting to the lender group of security over the Group's regulated entities;
- provision of information in relation to the Group’s long-term strategy;
- all lender approval of the Group's strategic plan and long-term financial forecasts;
- the company raising additional subordinated capital of at least AUD 150 million; and
- other customary conditions precedent.
The new facility will become effective upon completion of long-form documentation and satisfaction of various conditions precedent, the announcement states.
Further, The Star currently expects to release its Appendix 4E, including its unaudited accounts for the year ended June 30, 2024 on Sept. 26.