Rewrites throughout with further updates to details and background; adds bylines

By Rishav Chatterjee and Byron Kaye

March 11 (Reuters) - Australia's No. 2 casino operator Star Entertainment SGR.AX 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 .N> 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 0035.HK 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.)

((Rishav.Chatterjee@thomsonreuters.com))