Lenders of embattled Star Entertainment Group are said to have tentatively agreed a multi-step bailout plan aimed at giving the casino operator an opportunity to restructure and reverse its flagging fortunes.
According to the Australian Financial Review, such a bailout package includes an initial AU$100 million loan to cover cost blowouts from the recent opening of the Queen’s Wharf Brisbane project, with another AU$100 million on offer provided the company can also secure more capital elsewhere.
It is hoped that by buying Star more time, recently appointed CEO Steve McCann – the man who began the successful remediation of Crown Resorts prior to Blackstone’s takeover – will be able to implement similar reforms to make the company both compliant and profitable again.
The AFR says Star’s lenders have not yet approved the bailout although sign-off is imminent pending final approval from their respective investment committees.
For Star, the additional support would also help it avoid selling one of its three casinos in Brisbane, Sydney and the Gold Coast. As part of a multi-pronged plan, Star is looking towards duty relief from the Queensland government – NSW has already said no – plus asset write-downs and non-core asset sales such as the recent sale of the old Treasury Casino building in Brisbane for AU$67.5 million, the AFR reports.
All told, Star is looking to raise up to AU$350 million to stave off short-term debts and provide sufficient cash flow. An official announcement on the company’s equity raising initiatives and release of its FY24 financial results is anticipated to take place next week, according to some media reports.
Star’s perilous financial position, coming off the back of a second finding of unsuitability by the NSW Independent Casino Commission, stems from a combination of significantly higher compliance costs imposed due to historical AML and responsible gambling failures, a softer domestic gaming market due to economic tightness, and the absence of international high rollers.
