Star Entertainment’s shares sink 16pc on fund raising as Bruce Mathieson rules himself out
Investors have dumped shares in Star Entertainment after it emerged from a trading halt, following a $1.2bn equity raising and refinancing deal.
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Shares in beleaguered casino operator Star Entertainment have plunged to a fresh low after it raised $565m from institutional investors.
The raising, priced at 60c a share – was part of a broader equity offer and refinancing deal which totalled $1.2bn – the equivalent of the company’s market value before it entered a trading halt on Monday.
But when it resumed trading on the ASX on Wednesday, its shares dived 16 per cent to 63c, giving a fresh market capitalisation of $1.02bn. This is lower than Auckland-based rival and Adelaide casino operator Sky City’s $1.4bn.
Billionaire pokies baron Bruce Mathieson did not participate in the raising. Mr Mathieson previously participated in Star’s $800m raising in February, joining Star’s joint venture partners Chow Tai Fook and Far East Consortium.
In a statement, Star said the take-up rate in the institutional entitlement offer was about 67 per cent. “The Star received significant interest from institutional shareholders and new investors,” the company said.
Chief executive Robbie Cooke said: “We are pleased and appreciative of the support we have received from both our existing shareholders and new investors.
“The refinancing and further capital structure initiatives announced yesterday represent a key milestone in the renewal of The Star.
“With a strengthened balance sheet and additional flexibility, we have a strong platform from which to deliver on our renewal program and strategic priorities.”
Star now wants to raise about $185m from retail investors, when the offer opens on Thursday.
The capital raising and refinancing deal could take Star “out of the woods”, Macquarie analysts said, but others argued it was a long way back for the company after such a massive destruction of value over recent years.
“The earnings outlook for Star is improving with current trading the likely low point,” said Macquaire in a note to investors on Tuesday.
“The completion of the debt refinance with the help of an equity raise resets the balance sheet.”
But Hunter Green Institutional Broking director Charlie Green has called Star one of the worst-ever destroyers of shareholder value by a Queensland-based company, likening it to the collapse of financial services group MFS in January 2008.
Gold Coast-based MFS imploded owing more than $2bn, leaving investors out of pocket in a precursor to the economic devastation wrought just months later when the global financial crisis began.
Mr Green pointed out that Star’s market cap in 2017, when its shares were trading at $6, was $5bn.
Explosive inquiries in NSW and Queensland have weakened the company, which is fighting to maintain its casino licences in the two states. It also is fighting a court battle with Multiplex over cost overruns on its flagship Queen’s Wharf project in Brisbane.
Star in August posted a full-year statutory loss of $2.4bn, largely due to writedowns of its existing properties in Sydney and the Gold Coast.
Its dividend suspension will continue until it reduces its debt levels and a fine potentially totalling hundreds of millions of dollars from the financial crimes regulator is resolved.
Originally published as Star Entertainment’s shares sink 16pc on fund raising as Bruce Mathieson rules himself out
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