Star Entertainment faces financial crossroads, thousands of jobs at risk
Star Entertainment remains suspended from trading by the ASX after it failed to lodge financial statements for the December half-year.
The company may not trade again if its lenders fail to agree to a fresh funding deal, putting over 9000 staff at risk of losing their jobs.
Star has been unable to secure financing to ensure it won’t run out of cash as early as this week.
“The Company is unlikely to be in a position to lodge its (December half year) report unless, and until, it has secured a refinancing commitment that would enable The Star to refinance all of the Group’s existing corporate debt, as well as to provide additional liquidity,” Star said in a statement from its board.
For Star to resume trading, operators must agree to any asset sale or refinance of their debt which is paying interest of more than 13 per cent.
Star’s management is urgently negotiating with a syndicate of major lenders, including Macquarie, Westpac, Deutsche Bank, Washington H Soul Pattinson, and Barclays. The company is seeking either the acceptance of an $800 million asset sale or a crucial refinancing of its $430 million debt.
Shares plummeted over 15% on Friday, closing at 11 cents, a stark contrast to its former $5 billion valuation, now standing at a mere $315 million.
The company, which delayed its financial results, is reportedly considering last-minute "proposals" to avoid voluntary administration. Star has indicated that any viable proposal must provide substantial financial stability and have a realistic chance of rapid implementation.
Previous attempts to secure financial lifelines include a $650 million refinancing offer from US asset manager Oaktree Capital, which was contingent on numerous approvals and lender agreements. Star has also received expressions of interest from its Chinese partners, Chow Tai Fook Enterprises and Far East Consortium International, regarding a potential 50% stake in its Queen's Wharf casino in Brisbane. Major shareholder Bruce Mathieson had also previously made offers for the company's Gold Coast casino.
Star's current financial woes stem from a series of regulatory scandals. Investigations initiated in 2022 revealed significant breaches of anti-money laundering regulations, facilitation of illegal capital flows, and inadequate measures to address problem gambling. Further inquiries in 2023 uncovered additional licensing violations, including falsified records. The Sydney casino has been under government-appointed management since the initial 2022 findings.
Beyond regulatory challenges, Star has also faced declining gaming turnover and the implementation of cashless gaming in New South Wales, with Queensland soon to follow.
The impact of a potential Star closure would be significant, particularly in Sydney, where its Pyrmont site is a major tourism hub. The site boasts 650 hotel rooms and 36 food and beverage venues, and any closure would ripple through the local economy.
Both the NSW and Queensland governments have expressed their primary concern as the protection of jobs during this critical period.
Jonathan Jackson, 4th March 2025
