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The board of Australian casino and hotel company The Star Entertainment Group has unanimously accepted an 11th-hour takeover bid from Bally's Corp, likely saving the embattled operator from liquidation.

Star Entertainment entered into a binding term sheet on Monday (April 7) with the US-based casino operator for an aggregate principal value of A$300m (A$181m), according to a Star filing to the Australian Securities Exchange later in the day.

That amount is A$50m larger than the initial Bally's offer in March.

Pending multiple regulatory checks and lender backing, Bally’s will acquire up to 56.7 percent of Star Entertainment’s fully diluted share capital in tranches of A$100m and A$200m, with the latter to follow shareholder approval.

Under the terms of the agreement, however, the Bally’s holding may be reduced by up to A$100m if Star Entertainment’s leading shareholder, Australian billionaire pub mogul Bruce Mathieson, increases his investment in the company, leaving open the possibility of Bally’s holding less than 50 percent.

“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,” Bally’s said in a statement.

Bally’s chairman Soo Kim said the capital injection would “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.”

The deal includes Star's Sydney and Gold Coast casinos and hotels, but it remains unclear if the takeover includes its Brisbane casino, which appears set to be sold to Star’s Chinese consortium partners Chow Tai Fook and Far East Consortium after the parties reached a deal in early March.

That deal would see Star Entertainment sell off all holdings in the Brisbane property and terminate its casino management agreement in exchange for full control of gaming and non-gaming assets at its nearby Gold Coast casino precinct.

At the same time, the Bally’s takeover announcement includes reference to the Brisbane property as a Star asset, while stating in the binding term sheet that it “acknowledges the Issuer’s existing agreement to exit Destination Brisbane Consortium and consolidate The Star's position at the Gold Coast”.

The Star Entertainment deal with its Chinese partners has been dogged by controversy and a redacted probity report whose release Chow Tai Fook attempted to block through litigation. Approval of the deal remains subject to government and regulatory approvals.

Still, the Queensland state government has expressed enthusiasm for the sale despite the Chinese parties giving “incorrect, incomplete and/or inconsistent information” to the Office of Liquor and Gaming Regulation over their dealings with jailed Macau junket supremo Alvin Chau.

The Bally’s-Star deal is the strongest indicator in years that Star Entertainment can remain open for business after years of plunging gambling metrics amid pandemic disruption, warnings by Beijing to Chinese high-rollers to stay out of casinos, and two devastating regulatory inquiries that triggered purges of the Star board.

Notwithstanding Bally’s reputation for acquiring and invigorating distressed gambling assets, Star’s rapid exhaustion of its cash reserves and a long-delayed latest financial report reflect the elevated risk that Bally’s is buying into, with the longer-term cost of rehabilitating Star’s business an open question.