New Queensland LNP government lukewarm on Star assistance

Star Entertainment’s financial performance has deteriorated in the first quarter with the new LNP government in Queensland signalling it is lukewarm on the idea of providing taxpayer help.

Queen's Wharf opened in September.

Troubled casino group Star Entertainment has reported a continued deterioration in its finances in the first quarter adding to growing uncertainty about its future.

Revenue dropped 18 per cent to $351m in the three months ended September 30, Star said in its quarterly cash flow report released to the ASX on Tuesday night, with a loss before interest, tax, depreciation and amortisation (EBITDA) of $18m. The company said there continued to be a deterioration in operating performance due to the challenging environment and the implementation of mandatory carded play and cash limits.

“The impact of a more challenging consumer environment, loss of market share and the impact of changed business practices continue to negatively impact top-line performance,” Star said.

Star last month accessed $200m in emergency funding as it looked to slash up to 350 jobs and offload hotels and other assets after warning it faced significant liquidity challenges.

The company, which had been on the brink of financial collapse due to a $300m cash crunch, had sought ­financial help from both the NSW and Queensland governments. The Star said it continued to work with its lenders to finalise a new debt facility that will provide the additional $200m in liquidity.

The company said it had available cash of $149m at the end of September, including proceeds of $60.5m from the sale of the old Treasury casino building in Brisbane. Revenue continued to trend down at The Star Sydney, with a $4.4m impact from system outages in July combined with a challenging consumer environment.

It said $45.9m in revenue was generated by the Queen’s Wharf integrated resort in Brisbane with EBITDA of $4.5m. That excludes some centralised costs including gaming supervisory levy and insurance

Star’s worsening financial position comes as the incoming Queensland LNP government signalled it is lukewarm about providing taxpayer assistance to the group.

A spokesman for the government said it would look at any correspondence between the former Labor administration and Star to see what, if anything, was promised in relation to a possible tax ­deferral for the debt-laden company. But Star would have to provide a convincing business case to warrant assistance and it would have to be discussed by the new cabinet.

Before the election, then Labor premier Steven Miles raised the possibility of a tax deferral but the payment of generous executive bonuses by Star emerged as a sticking point for any deal. “There may be consideration of the time frame in which they could be paid, or should be paid, but we won’t be entertaining that discussion until they agree not to pay performance bonuses,” Mr Miles said in late September. “We want every single dollar of tax to be paid.”

It was understood that talks between the Labor government and Star were continuing until the administration entered caretaker mode before the state election campaign. Star on Tuesday declined to comment on whether further talks were planned with the new government.

Separately, new Deputy Premier Jarrod Bleijie said the government was “absolutely” committed to releasing the probity report into Chow Tai Fook’s suitability to operate as joint venture partner for Queen’s Wharf. The report into Chow Tai Fook Enterprises – which owns a 25 per cent stake in Queens Wharf – was ordered by the state government in 2022 after allegations of the company’s links to organised crime figures.

Jarrod Bleijie at Queensland Parliament a day after the state election.

After a 16-month probe by the state’s gaming regulator, Queensland’s Labor government declared Chow Tai Fook a suitable casino operator in May. The former state government had faced accusations that it helped Chow Tai Fook block the release of the report in the Supreme Court, just days before Queen’s Wharf opened.

Before the election, Mr Bleijie expressed concern about the fin­ancial problems facing Star but did not commit to any financial assistance if the LNP won power.

“The LNP government was the one to start this whole (Queen’s Wharf) precinct and get this stuff out of the ground so I am concerned, obviously, about the staff,” Mr Bleijie said. “But I’m also concerned about accountability and transparency, and until those questions are answered, we’re not going to have a position on what the outcome may be after the election if government changes and until we are properly briefed on the background.”

The NSW casino regulator earlier this month stopped short of removing Star’s gaming licence over fears the entire company could fold, instead dishing out a modest $15m fine while keeping operations under the close supervision of government regulators.

The NSW Independent Casino Commission said it would prolong the suspension of Star’s Sydney casino licence until at least March following the Bell II inquiry, which found continuing regulatory failures by the group. The NICC-appointed manager Nick Weeks will continue to have oversight of its casino.

Star Entertainment chief executive Steve McCann

NICC chief commissioner Philip Crawford said the inquiry identified continuing compliance failures, and operations at The Star that fell far short of suitability to hold a casino licence.

But Mr Crawford said taking Star’s licence away would cripple the company and have serious effects that would ripple through the economy. Stripping the casino group of the licence would not only affect its 9000 staff, but multiple connected businesses.

The Queensland Department of Justice and Attorney-General said The Star’s Brisbane and Gold Coast casinos would continue to operate under an approved remediation plan, with Mr Weeks as an independent adviser.

Star CEO Steve McCann is believed to be targeting institutional and strategic investors to secure the $150m needed by Christmas.

Originally published as New Queensland LNP government lukewarm on Star assistance