Star Entertainment Group could collapse within weeks, wage safety net considered
The Federal Government has responded to the shock news that Casino behemoth Star Entertainment Group could collapse within weeks, putting the future of Queen’s Wharf at risk.
QLD Business
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Thousands of Queenslanders employed by Star may be temporarily saved by a government wage safety net should the casino behemoth go bust, Federal Minister Murray Watt has confirmed.
A “concerned” federal government will be watching the financial woes of Star though Senator Watt said there had not been requests yet made to the federal government by the company for help.
Embattled Star Entertainment Group may have just six weeks’ worth of cash left if it doesn’t find additional funders, with analysts from Morningstar giving the company a 50:50 chance of collapsing into administration by the end of February.
An estimated 3000 people work at the new Queen’s Wharf precinct, with more at the Star’s operations on the Gold Coast.
If Star collapse, if will be the largest corporate failure since Virgin Australia crumpled under $4.8bn of debt in 2020.
“Firstly, as a Queenslander, and obviously as a Minister in the Federal Government, I’m concerned about the future of Star Entertainment,” Senator Watt said.
“I’m particularly concerned as the Employment Minister for the future of the workers at Star. I’m sure that Star is making contact with its workers, and I certainly hope that they are to provide good information to its workers about what their intentions are.”
Senator Watt said the primary support for workers at a federal level would be through the Fair Entitlements Guarantee program, available for employees of companies which go into liquidation.
The FEG is a “legislative safety net scheme of last resort” that provides financial assistance to those who have lost their jobs due to companies going bust, and who are owed employee entitlements which can’t be paid by their employer or another source.
“We’re obviously not at that point when it comes to Star, and I don’t want to sort of alarm people about that,” Minister Watt said.
“But the reality is those types of programs are in place, just as there are programs at a federal and state level to assist workers to find new jobs if their company does go under.
“I think at the moment, you know, we’d all like to see Star remain viable and those workers retain their jobs.”
Its largest shareholder Bruce Mathieson this week warned Star would either “go bankrupt or be bought” as reserves run dry.
Queensland Treasurer David Janetzki has held talks with Star, however it is understood the state government is unlikely to support the troubled operator.
Some 3000 people are employed at the new Queen’s Wharf casino, hotel and retail precinct.
Star told the Australian Stock Exchange this week its available cash at the end of December had dropped 46 per cent to $79m, a fall of $70m from September 30.
If that cash burn continues, Star would only be able to survive another six weeks without additional funding.
Speculation is mounting the company could be sold and its assets – The Star Brisbane, The Star Gold Coast, its Sydney property and the Gold Coast Convention and Exhibition Centre could be carved up.
Premier David Crisafulli declined to speculate on the future of the casino giant, but said workers at Queen’s Wharf and on the Gold Coast should be protected.
“I’m very confident regardless of the ownership – that’s not saying one way or another – but regardless of what happens with the ownership of that entity the focus has to be on making sure there’s jobs here,” he said.
“We’re not in the business of being concerned about the corporate suits who sit around a company. The future of Star is a matter for Star.”
Asked how the government could help workers, the Premier said: “By making sure that as part of any future continuity that the place stays open … that’s something that we can certainly help at and send those signals to the market”.
“Our focus is on the men and women who work there, not on casino joints,” he said.
Star Entertainment had sought financial support from the Labor government before the October 26 state election.
Talks collapsed when the government could not be assured it would be repaid first if the company collapsed and did not receive a commitment Star would stop paying executive bonuses.
Morningstar analyst Angus Hewitt said at Star’s current cash burn, the company might be lucky to make it to the end of February.
“We now incorporate a 50 per cent probability that Star falls into administration,” he said.
“Star needs a more immediate solution and we believe it is unlikely it can trade itself out of this predicament.”
Star chief executive Steve McCann said the company’s priority was to work with stakeholders to “try to deliver a viable outcome for the business.”
“The focus is on saving jobs and providing a sustainable future for our 9000 hardworking team members,” he said.
The new LNP state government’s prosecution of Labor’s deal with Star Entertainment and the Queen’s Wharf consortium has slowed as the company fights for survival.
Labor awarded Star a casino license on the eve of the $3.6bn Queen’s Wharf opening despite it failing to tenant accommodation, dining and retail spaces as required.
“There were commitments that were given that weren’t fulfilled, but let’s focus on the immediate priority and that is the workers who are there,” Mr Crisafulli said.
He also pledged to release a probity report into Chow Tai Fook Enterprises, but did not provide a date.
“We’ll be doing that when it’s the right time for transparency and probity, but the commitment we made before the election will be on it – there’s still some matters that are being investigated at the moment,” he said.
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