Star names stopgap CEO as financial troubles continue

The troubled gaming company has named another stopgap chief executive as it warned cost-of-living pressures and economic challenges would continue to hit its bottom line. 

Star’s Queens Wharf project in Brisbane.

Troubled Star Entertainment has named another stopgap chief executive as it warned cost-of-living pressures and economic challenges would continue to hit its bottom line. 

Star said interim chief financial officer Neale O’Connell would add acting CEO responsibilities to his list of duties while a search for permanent executives continued.

The gaming group has lost a string of executives in recent months, including former CEO Robbie Cooke and chief financial officer Christina Katsibouba, as it faced continuing regulatory scrutiny of its operations in Sydney and Queensland. 

The well-regarded Mr O’Connell, a former chief financial officer at Tatts Group and Corporate Travel Management, is expected to bolster Star’s reputation in the eyes of NSW regulators as they decide whether the group can keep its Sydney casino licence.

In a trading update on Monday, the group warned higher costs associated with remediation as well as difficult economic conditions continued to bite. Star shares dropped 4.7 per cent on Monday to 47 cents.

Revenue in the fourth quarter would be 4.3 per cent below the previous quarter and 3.3 per cent lower than the prior corresponding period. Annual group revenue would be between $1.67bn and $1.68bn, while earnings are to be in the range of $165m to $180m.

Star’s casinos in Sydney, Gold Coast and Brisbane are expected to decline 13.2 per cent, 22.6 per cent and 18.2 per cent respectively in the quarter.

Revenue from premium gaming revenue also continues to slow and is forecast to be down 16.5 per cent compared to the prior corresponding period.

Former Star Casino CEO Robbie Cooke.

Mr O’Connell will receive an additional $40,000 per month, commencing Monday, for the interim period. Chairman Anne Ward also will take on increased duties and will receive increased fees of $20,000 per month, with effect from April 29.

It comes as former chairman David Foster ceased executive responsibilities and resigned as a director. Star said “trading conditions have remained challenging” with elevated operating expenses as a result of ongoing remediation and transformation activities, also expected to hit financial performance. “The Star will seek to expedite a range of initiatives to further reduce the operating cost base of the group,” the company said.

Star said it progressed its recruitment process for a new permanent group CEO and expects to make an announcement in the near term.

Adam Bell SC last month completed his second inquiry into Star’s suitability to hold a casino licence in Sydney, following a probe in 2022 that found it had not met its obligations to prevent money laundering and other mis­conduct. Mr Bell is expected to make his recommendation to the NSW Independent Casino Commission (NICC) next month.

Star will need to refinance more than $1bn worth of debt over the next 18 months for its new Queens Wharf project in Brisbane. Testimony to the inquiry by a succession of former Star executives had revealed a deeply conflicted leadership at war with the regulator, and allegations of fraud, falsification of safe gambling welfare checks and spying.

Hunter Green IB director Charlie Green said Mr O’Connell would be a “safe pair of hands” as Star continued to navigate difficult times.

“Whether he wants the job on a permanent basis would be up to him,” said Mr Green. “While the trading update is disappointing the real story is what happens next and my feeling is that the appointment of Neale will encourage the regulator to extend their licence.” Mr Green said a permanent CEO would be unlikely to be named before Mr Bell makes his recommendation. Star said negotiations for the sale of assets including the Treasury casino, hotel and car park in Brisbane continued. The Star has also commenced a process to sell the Festival Car Park in Brisbane and continues to review the potential sale of other non-core assets.