Star Entertainment set to delay its interim results, shares resume trading

Troubled casino operator Star Entertainment Group has seen its shares sink as it mulls several down-to-wire ‘liquidity proposals’ to avoid a financial collapse.

Star Entertainment CEO Steve McCann.

Shares in troubled casino operator Star Entertainment Group plunged after the company said it was considering several down-to-the-wire “liquidity proposals” to avoid a financial collapse.

Star shares went into a trading halt on Friday morning as the board held a crisis meeting, amid question marks over whether the company could continue as a going concern. They resumed tradng at lunch time with shares sliding 15 per cent to close at 11c.

The company said it was anticipating receiving at least one proposal as early as Friday, and had delayed releasing its interim results as it explored “possible liquidity solutions that might materially increase the group’s liquidity position”.

“(It) anticipates that it will receive one or more liquidity proposals during the course of today,” Star told the ASX on Friday. It is understood one proposal would see Star sells its hotels in Sydney and the Gold Coast and operate as a pure casino company.

Pub billionaire Bruce Mathieson Snr, the largest single shareholder in Star, said he was not involved in any deal for the Gold Coast properties, describing company’s situation as a “mess” but the next fews days were likely to see some development.

Star earlier this month said it was considering a potential $650m financial lifeline from US-based Oaktree Capital. Star also revealed it had been approached about the sale of its half share in the debt-laden Queen’s Wharf precinct in Brisbane to its Hong Kong-based partners, Chow Tai Fook Enterprises and Far East Consortium.

If Star’s half-yearly financial report is not lodged by the close of business Friday, trading in its shares will be suspended from Monday as required by the ASX’s listing rules.

“Such a suspension would continue until the report is lodged and the ASX determines that the company’s shares should be reinstated to quotation,” Star said.

“As noted in the company’s recent ASX announcements, there remains material uncertainty as to the group’s ability to continue as a going concern.”

A decision to delay the release of its half-yearly results on Friday would be another potential nail in the coffin for the stricken casino operator.

Star’s directors meeting in Sydney are weighing up whether the casino operator can continue as a going concern and pay its liabilities as they fall due.

“As noted in the company’s recent ASX announcements, there remains material uncertainty as to the group’s ability to continue as a going concern,” Star said.

A source close to the company told The Australian that Star, which has been teetering on the brink of collapse since late last year, did not appear to have support to keep meeting its financial commitments including interest payments and payroll.

That put Star closer to appointing administrators, a scenario flagged by the company earlier this year after warning of its deteriorating liquidity position.

The source, who has knowledge of the situation, had flagged that Star was likely to enter a trading halt on Friday to consider the next steps.

A financial collapse of the company, which has casinos in Sydney, Brisbane and the Gold Coast, could throw thousands of people out of work and impact the tourism sector across both Queensland and NSW.

Star, headed by former Crown Resorts boss Steve McCann, delayed the release of its annual financial results in late August, resulting in a lengthy suspension from the ASX while it scrambled to put together a financial rescue package.

Just days earlier the NSW Independent Casino Commission (NICC) had released the damning findings of the Bell II inquiry into the company’s continuing regulatory failures.

NICC chief commissioner Philip Crawford said the Bell II report revealed a company that had not moved quickly enough to address the governance and cultural concerns raised in the first Bell report. Star shares have slumped 77 per cent in the past year.

Star has already sold the old Treasury casino building in Brisbane and an event centre in Sydney to raise much needed cash. A sale of its luxury hotels could raise enough funds to allow Star to trade through its current difficulties.

Star’s revenue plunged in the December quarter, exacerbating its cash crunch amid rising costs at its new $3.9bn Queen’s Wharf precinct in Brisbane, fines from regulators and tighter gambling controls. It had $78m in available cash at the end of December after revealing earlier this month it had burnt through more than $100m in just three months.

At the time Star said that given the reduction in the group’s cash pot and its “ongoing financial and liquidity challenges”, the board was continuing to seek external advice in respect of its duties, including “safe harbour” provisions.

These provide legal protection for directors to manage a struggling company’s affairs while they explore restructuring.

Star Entertainment chief executive Steve McCann. Picture: Max Mason-Hubers

The continuing financial troubles for Star comes amid ASIC’s ongoing case in the Federal Court against the company’s former executive team and board for breach of duties in relation to money laundering controls and other activities at its casinos.

The Federal Court earlier this month heard that former Star Entertainment executives were “incurious and complacent” about alleged criminal activity and money laundering involving junket operators at its casinos, including bags of $50 notes delivered secretly to a private gaming salon.

Former Star casino chief Greg Hawkins and chief financial officer Harry Theodore have reached a settlement with ASIC over their admitted breaches.

Originally published as Star Entertainment set to delay its interim results, shares resume trading