Star Entertainment Group chiefs to front public inquiry over Sydney casino licence

Top executives at The Star Entertainment Group will be hauled in front of a public inquiry as part of NSW’s regular review of its Sydney casino licence.

In a statement to the ASX The Star said it ‘welcomes the opportunity to fully co-operate with the review’.

Top executives at The Star Entertainment Group will be hauled in front of a public inquiry as part of NSW’s regular review of its Sydney casino licence.

It comes after media allegations surfaced earlier this month accusing Star of sitting on confidential reports outlining flaws in its anti-money laundering systems while courting high rollers with potential links to organised crime, wiping almost $1bn off its market capitalisation.

The NSW Independent Liquor and Gaming Authority confirmed the move on Tuesday, following a request to open the legally mandated review for hearings by its lead, Adam Bell SC.

Mr Bell was previously the senior lead council NSW’s Bergin Inquiry into Crown Resorts, which revoked the James Packer backed group’s NSW casino licence earlier this year.

“Mr Bell has advised ILGA that he considers it in the public’s interest to hold public hearings on matters including but not limited to The Star’s maintenance and administration of systems to counter money laundering and infiltration by organised crime,” the regulator said.

“ILGA is fully supportive of Mr Bell’s decision, with hearings expected to be held in March 2022. The publicly available report will be due to ILGA by 30 June 2022.”

The Star denies the allegation it did not implement the recommendations of the confidential reports. In a statement to the ASX The Star said it “welcomes the opportunity to fully co-operate with the review, in all manner required by Mr Bell SC.”

Separately on Tuesday, the company announced it had reduced the possibility of defaulting on its debts after securing debt covenant support from its financiers.

The casino operator, despite pulling a $57.9m profit in the 2021 financial year, has been badly hit by the impact of NSW’s recent lockdown on its flagship Sydney casino, which only reopened last week after months of closure.

In its annual report last month, The Star noted that “if existing lockdowns are prolonged” the group could potentially breach covenants associated with its borrowing facilities at December 31, 2021 and June 30, 2022.

But on Tuesday, it confirmed it had secured “a full waiver of the gearing and interest cover covenants for the 31 December 2021 testing date”.

For the June date, The Star will be able to annualise its earnings from the second half of FY22 for the purpose of calculating covenant ratios, while an amendment to the gearing and interest cover ratio metrics to provide additional headroom.

It will be able to pay a cash dividend if its net debt to fiscal 2022 annualised EBITDA ratio is below 2.5.

Shares in The Star closed at $3.69, down 0.27 per cent.