Australia’s Star Entertainment Group Limited said Tuesday that it has satisfied the conditions precedent to draw down the first AU$100 million tranche of a recently announced debt facility, with the funds expected to be received by next Monday 9 December.
The facility, which may include a second AU$100 million tranche pending Star satisfying additional conditions, is aimed at giving Star much needed liquidity and ultimately buying Star and its recently appointed CEO Steve McCann time to restructure the business amid concerns the company is sitting on the edge of collapse following a second finding of unsuitability in NSW and a cost blowout at Queen’s Wharf Brisbane, opened in August.
As noted by Star, the terms of the facility require the proceeds of the recent Treasury Casino sale to be placed into escrow, resulting in a net increase in cash for the company of approximately AU$37.1 million (US$24.0 million) after fees.
“The parties are working together towards satisfaction of the conditions precedent for the company to draw down the second tranche, with an availability period up to 9 April 2025,” Star said.
Conditions around the second tranche include the receipt of required regulatory consents and finalization of documentation for the granting to the lender group of security over the group’s regulated entities; provision of information in relation to the group’s long-term strategy; all lender approval of the group’s strategic plan and long-term financial forecasts; and the company raising additional subordinated capital of at least AU$150 million.
Star’s perilous financial state is the result of mounting challenges since the first Bell inquiry in 2022 found the company unsuitable due to serious lack of compliance, including the illegal use of China UnionPay cards to fund gambling at The Star Sydney, its dealings with Asian junket operator Suncity Group and the company’s response to independent audits of its anti-money laundering (AML) and counter terrorism financing (CTF) controls.
The mandatory implementation of cashless gaming technology and increased regulatory requirements have seen operational costs blow out, while visitation and player spend – particularly in the premium gaming segment – has plummeted.
Star is also facing multiple shareholder class actions and has set aside AU$150 million to cover a looming action by Australia’s AML watch dog AUSTRAC.
Although the NSW government last year agreed to defer the implementation of a significantly increased tax on poker machine revenues, it recently rejected a request for further assistance.
Star operates three integrates resorts – The Star Sydney in NSW and The Star Gold Coast and The Star Brisbane in Queensland.
