Australia’s Star Entertainment Group on Monday reiterated the existence of considerable uncertainty around its ability to continue as a going concern, noting that avenues through which it can raise much-needed liquidity are “limited”.
A little over a week since revealing it had burned through a large chunk of the AU$100 million debt facility it had drawn down in December, leaving just AU$79 million in available cash as of 31 December 2024, Star filed a quarterly activities update with the ASX which confirmed the company is having little joy in accessing any further funding as it looks to stave off liquidation.
That’s despite a second AU$100 million tranche becoming available should Star fulfil certain conditions required to access it.
“The Group continues to work towards the fulfillment of conditions precedent that must be met in order to draw down the additional AU$100 million under Tranche 2 of the New Facility,” it said Monday. “A number of these conditions remain challenging to meet given the Group’s current circumstances. In particular, the Group’s capacity to raise AU$150 million of subordinated debt is limited in the short term in the absence of additional liquidity solutions.
“In addition to seeking to fulfill the conditions precedent for Tranche 2 of the New Facility, the Group continues to also explore other possible liquidity solutions.”
Star confirmed recent media reports related to the application of safe harbour provisions aimed at protecting directors against personal debt liability should a proposed restructure fail.
However, it also hinted at a worst case scenario option with some analysts predicting the company won’t even survive until its 1H25 results announcement in late February.
“As noted above, the Group continues to explore other possible liquidity solutions,” Star said. “While discussions continue with respect to a range of different solutions, there is no certainty that any of these negotiations will result in one or more definitive arrangements that might materially increase the Group’s liquidity position.
“In the absence of one or more of those arrangements, there remains material uncertainty as to the Group’s ability to continue as a going concern.”
The dire situation comes despite Star reporting a narrowed AU$8 million EBITDA loss in the December 2024 quarter, improved upon the AU$18 million loss reported for the September quarter. Revenue of AU$299 million was, however, down 15% sequentially.
“The results for the period reflect continued weakness in the operating performance of the Group due to the ongoing challenging consumer environment, the impact of mandatory carded play and cash limits in NSW, and costs associated with ongoing remediation activities,” Star said.
On a positive note, the company was EBITDA breakeven in November and December, “reflecting the impact of seasonally stronger revenue in December 2024 and the benefit of the Group’s cost out program.”
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