Poker machine billionaire Bruce Mathieson has acquired up to a 10% stake in Star Entertainment, one of Australia’s leading gambling and entertainment companies, to expand his pokies share across the entire jurisdiction.
Puzzling the market:
Gold Coast-based pokies billionaire yesterday reported to the Australian Securities Exchange Ltd (ASX) that he had purchased a 9.97 % stake in Star Entertainment for $141.7 million. The move follows the last week’s Star’s $800 million capital raising announcement, with Mathieson having already put together a 4% stake before the raising began to puzzle the market about how he managed to reach the 10% stake.
According to Crikey, Mathieson didn’t reveal individual trades but only told ASX he spent $141.4 million between February 15 and 28. Therefore, the market doesn’t know home many more shares Mathieson will have to buy to keep ownership over the maximum 9.99%.
The source also considers Mathieson having been ”a bit crazy-brave” in supporting the compromised operations of the casino giant without any talks with a new management team. Star made a usual ASX announcement following ASIC requirements and produced a secondary offer explicitly disclosing the biggest “key risks” for prospective purchasers, such as ATO disputes (with ATO demanding another $142 million), fines ($100 million from both NSW and Queensland), suspensions of licenses, a $150 million provision for the coming AUSTRAC money laundering claims, and alike.
Many contingencies involved:
However, the capital raising included $115 million of shares offered at $1.20, which was a 21% discount to the previous close of $1.52. Taking into account that Star Entertainment shares were traded above $6 in 2019 and closed at $1.44 yesterday, it seems price-wise that the time is now to purchase the shares, but there are many contingencies around the casino giant testifying to either a ”crazy-brave” purchase or one that lacked thorough risk assessment.
Waiting for March 13:
Another risk refers to Star closing a special deal with two controversial Asian shareholders following their pre-commitment of $ 80 million into the capital raising. Even worse, 70,000 retail shareholders are banned from procuring any short-fall shares in the $205 million retail component which is therefore highly likely to fall at least $50 million short. The retail offer closes on March 13 and the market is waiting to see whether Mathieson has been promised part of the retail shortfall.
Capital raising is being managed by investment bankers Barrenjoey and Macquarie for a $13.7 million fee.
$15 billion worth market:
Mathieson told the press he would remain a Star shareholder for many years. However, he is 78 and stepped off the Endeavour Group board last year, so his son Bruce jr represents the family’s 15% stake in this company which currently amounts to $1.8 billion. The Mathiesons got rich on poker machines during the 1990s to profitably partner up with large players in 2004 in various ventures. The Mathieson family now has five different operations in the Australian poker machine market worth $15 billion a year.
Commenting on the Star investment, Mathieson said: “The main thing was to get to where I am [10%]. I will reassess it with my son and then we will have a bit of a think about which way we are going to go.” For the time being, the Mathieson family is the biggest shareholder in Australia’s largest casino company licensed to operate 4783 machines across its three casino facilities. If one of them joins the Star board, the family will be formally involved in the operations of almost 10% of Australia’s 200,000 poker machines.