SYDNEY, April 2 (Reuters) - Australia's Star

Entertainment said on Wednesday an up to A$940 million

($590 million) refinancing proposal with investment group Salter

Brothers Capital had collapsed, leaving it to rely on a rival

deal with U.S. casino group Bally's Corp.

Sydney-based Star, Australia's no.2 casino operator, said a

number of conditions required for the Salter proposal to go

ahead were unlikely to be satisfied in sufficient time to meet

the current liquidity needs of the company.

The development is a major blow to Star, which has been

struggling to stay afloat amid a growing debt crisis and

regulatory investigations at the casino group over the past two

years.

Star shares remained suspended from trading on the

Australian Securities Exchange, and the company said "there

remains material uncertainty as to the Group's ability to

continue as a going concern."

Star has enough cash to remain operational for one week, the

Australian Financial Review reported on Wednesday, citing

sources. The casino group did not immediately respond to a

request for comment on its cash position.

Star said the Salter Brothers talks ended after extensive

negotiations between the two firms, state governments and

regulators.

"It became apparent that it was unlikely that a number of

the conditions precedent to the refinancing proposal would be

able to be satisfied at all or in sufficient time to address the

current liquidity needs of the company," Star said in an

exchange filing.

"In particular, lender requirements for specific priority

arrangements and enforcement rights in relation to their

proposed security of non-gaming assets of The Star could not be

met."

Star said it was now exploring a refinancing solution with

Bally's from March 10, referring to an A$250 million

recapitalisation package that would give the casino group

control of 50.1% of Star.

Star continues to be unable to lodge its half-year results

in the absence of an appropriate refinancing proposal.

($1 = 1.5913 Australian dollars)