Star Entertainment Group suspends trading as it fights to stay solvent
The Star Entertainment Group has suspended trading after the ASX suspended the casino group for failing to post its financial results within the reporting period as it fights off insolvency.
The entertainment giant has approached investors including pokies billionaire Bruce Mathieson for extra funding to stay afloat.
Mathieson has backed previous capital raises which have netted close to $1.5 billion. However, Star is currently worth just 1.3 billion based on the last trading price of its stock at 45 cents.
That’s $1.2 billion less than Mathieson’s estimated wealth of $2.5 billion.
Star Entertainment is facing a critical 24 hours.
Several investors, including Perpetual and Mathieson, are closely watching the company's next moves.
Mathieson currently owns a 9.6% stake but has recently received regulatory approval to increase its ownership to up to 20% of Star's shares. Meanwhile, Perpetual raised its stake to 8.8% in May but would require regulatory approval to increase it beyond 10%.
Star Entertainment is scrambling to stabilise its underperforming casino business and address the probity issues that have jeopardised its retention of its Sydney casino license.
According to reports in the Australian Financial Review, the company is in discussions with its lenders about debt relief and potential new funding. Additionally, Star is seeking tax relief from the NSW and Queensland governments.
Last week, the company explored the possibility of raising $300 million through a convertible notes issue. However, this plan was put on hold after the release of Adam Bell, SC's final report into the second inquiry into Star's Sydney casino on Friday.
While Bell’s report stated Star was still unfit to hold a licence, that licence is unlikely to be revoked.
Star is expected to announce significant writedowns on its Brisbane casino, Queen’s Wharf, which exceeded budget and is struggling amidst a broader industry downturn.
Star Entertainment chief executive Steve McCann said, “I recognise that there are many complex issues and challenges for the company to address.
“I am committed to working with the board and the various stakeholders to help drive change, restore confidence and achieve a sustainable resolution.”
Jonathan Jackson, 2nd September 2024
