March 11 (Reuters) -

Australia's No. 2 casino operator Star Entertainment

said it has opened its books to investment group Salter

Brothers for a debt refinancing proposal worth up to A$940

million ($590 million) that could help stave off a collapse.

The proposal from Melbourne-based Salter Brothers, which has

investments in commercial real estate assets such as hotels and

childcare centres, would enable cash-strapped Star to service

the massive debts it acquired during a protracted industry

downturn, the casino firm added.

It also builds competitive tension between financiers

looking to bail out the company in exchange for high lending

rates or a potential equity stake. A day earlier, Star said U.S.

casino firm Bally's Corp made a refinancing approach

that could give it 50.1% of the Australian firm.

Salter Brothers and Bally's did not respond to Reuters

requests for comment.

Star had previously said it received a debt refinancing

approach worth up to A$940 million without saying who from. In a

two-paragraph statement on Tuesday, Star named Salter Brothers

as the party and added that it "has entered into an exclusivity

and process deed with Salter Brothers Capital relating to that

Refinancing Proposal".

A Star spokesperson did not respond to a Reuters request for

additional comment.

Australia's casino sector has been experiencing a protracted

downturn due to damaging regulatory inquiries, as well as

lockdowns and a border closure related to COVID-19, followed by

rising costs of debt.

The company's shares have been suspended from trading since

last Monday after it failed to sign off on its half-year

accounts by an end-February deadline. The board said at the time

it was concerned about the company's ability to meet near-term

liabilities.

Star said last week it would sell its 50% stake in a

just-opened casino in Brisbane to Hong Kong's Far East

Consortium International ( FRTCF ) and Chow Tai Fook Enterprises

for A$53 million, an asset that media reports said cost A$3.6

billion to build.

($1 = 1.5946 Australian dollars)

(Reporting by Rishav Chatterjee in Bengaluru and Byron Kaye in

Sydney; Editing by Alan Barona and Lincoln Feast.)