The Star needs a lifeline to avoid prospect of liquidation

The Star is under the pump to find a financial lifeline or a government bail-out to ward off the prospect of liquidation and 8000 job losses across its casinos in Sydney and Queensland.

Casino insiders claim The Star Entertainment Group is headed for liquidation because administrators won’t see the value in keeping it running.

The Star is racing the clock to find a financial lifeline or risk liquidation and the potential loss of 8000 jobs across its Sydney, Brisbane and Gold Coast casinos.

Industry insiders have told this masthead of concerns that The Star’s plight might not attract an administrator if it runs out of money, leaving no other option than to wind up the company.

Analysts have suggested The Star will drain its cash reserves by the end of February and may be forced into voluntary administration unless further loan funds or government support was secured.

But a source, speaking on condition of anonymity, said: “Administrators are paid from the company’s assets.”

Star Casino. Picture: Nikki Short

“They are also liable to pay for any costs incurred during administration.

“If there’s any lack of funds it’s the administrator who then becomes personally liable for any shortfall.

“Given that scenario you might struggle to find an administrator willing to take on the job if they consider a company too much of a basket case.

“If that occurred at The Star they would be facing liquidation and if technically insolvent – that is, they can’t pay their debts when they fall due – then they can no longer continue to trade.

“That means the doors close and people lose their jobs.”

A second insider said a break-up of The Star’s assets – which would require shareholder approval – was another option on the table with the sale of the Gold Coast and Brisbane casinos most likely.

The Star in Sydney. Picture: John Feder

The source was unsure about The Star Sydney in the case of property sales, saying: “You would have to think the only option is Blackstone (the US private equity firm that owns Crown Sydney).

“A reason Blackstone might not have moved to date is that The Star still has an AUSTRAC fine pending and a class action on foot. Anyone buying at this point will have to inherit those liabilities.

“Otherwise, they wait for The Star to go under and then apply to the regulator to take over the licence, in which case they would have a clean slate and no fines or court cases to deal with.”

As for the Gold Coast and Brisbane venues, the source added: “Bruce Mathieson lives on the Gold Coast and he’s known to love the property.

“So it would not surprise to see The Star’s biggest shareholder make a play there.

“Then you have Far East Consortium and Chow Tai Fook who already have a 50% stake in the Queen’s Wharf development in Brisbane.

“If they wanted to acquire that Brisbane precinct outright they would need to find and partner with an operator for the casino.

The Star CEO Steve McCann, chief executive, The Star Entertainment Group speaks at the company's AGM in Brisbane.

“You have to wonder whether KT Lim who was spotted in Sydney recently might be a fit there. His casino assets globally are extensive.

“Importantly, he also went through probity and was approved for a 25 per cent shareholding in The Star several years ago.

“He didn’t take that up at the time and eventually sold out of the business in 2017.”

The Star’s CEO Steve McCann has said he believes the group can return to profitability, citing a corporate restructure to cull head office functions and separate individual properties.

“We believe we can do that well and take out costs without the company needing to go through administration to achieve that,” he said. “What Star is asking for is time to reset the business.

“Clearly we’re in difficult times at the moment and it’s very challenging for people to see beyond the immediate issues.”