COVID-19: Star announces further measures to shore up finances amid pandemic

The operator of The Star Gold Coast has moved to secure $200 million as it reveals the massive operating costs needed to get through the COVID-19 crisis.

THE operator of The Star Gold Coast has moved to shore up its finances and cut spending, however its major Glitter Strip project remains unaffected.

Star this morning updated the market on its business since it was forced to close its casinos on March 23 and stand down 90 per cent of staff the following day.

The company has applied for staff to be part of the Federal Government’s JobKeeper payment plan, which provides $1500 a fortnight to eligible employees.

It said it has executed a $200 million debt funding facility with existing lenders to strengthen liquidity.

An artist's impression of the 53-storey Dorsett tower at The Star Gold Coast.

The company currently has cash and undrawn debt facilities of $700 million, including $70 million set aside for employees to access annual leave and long service entitlements.

CEO Matt Bekier said the company is moving to be in a position to fire up operations quickly when social distancing restrictions are lifted.

“The Star is implementing necessary and wide-ranging measures to strengthen the balance sheet and preserve liquidity in the current exceptional circumstances,” he said in the statement.

“The shutdown continues to have a significant impact on our people and their families, and the Group welcomes the Australian Government’s support, particularly the JobKeeper Payment program.

“Our focus remains on preserving the Group’s solid financial position and operating flexibility to resume operations quickly when the current COVID-19 restrictions begin to lift.”

An artist's impression of the 53-storey Dorsett tower at The Star Gold Coast.

Star has estimated its operating expenses during the shutdown at $10 million per month from April made up of payment to employees that have not been stood down (the casino’s hotels are still operating) as well as security and other fixed costs.

In total the company estimates it needs $220 million in cash for a three-month shutdown (ending on June 30) and $320 million for an extended six-month shutdown (ending on September 30).

As well as annual leave and long service entitlements, this also includes interest payments for debt as well as the company’s joint-venture and other contributions due for projects, including the $400 million Dorsett hotel tower. The hotel isn’t expected to open until 2022.

That project is being undertaken between Star Entertainment and investor partners Chow Tai Fook Enterprises and Far East Consortium.

It remains unaffected by the current shutdown and Star removing $25 million in capital expenditure for this financial year, which mostly relates to the Sydney Sovereign Resort.

Star stock fell 3 per cent in early trade to $2.25.