Star Entertainment investor welcomes executive purge as ‘necessary step’

Wilson Asset Management, one of Star Entertainment’s largest shareholders, says the exit of chief executive Robbie Cooke was a necessary step.

Star Casino chief Robbie Cooke at the Queensland Queens Wharf development in January. Picture: David Clark

One of the largest shareholders of troubled casino operator Star Entertainment Group has welcomed the departure of its chief executive, following Robbie Cooke’s strident defence of his “tireless” commitment in the role.

Wilson Asset Management, Star’s fifth-largest shareholder, said Mr Cooke’s exit was a “necessary step” that should ensure the casino owner regains its operating licence.

The chief executive announced his immediate departure on Friday night after just 16 months in the role, defending his efforts to reform the casino operator in a letter to staff that cited a “rare” confluence of regulatory and other hurdles.

The NSW independent Casino Commission (NICC) last month announced a second inquiry into Star’s suitability to operate its Sydney casino, amid concerns it was not moving quickly enough to reform its ­business.

The former Tyro Payments boss said he decided to resign because he believed his continuation in the role could threaten Star’s chances of winning back its casino licence in NSW.

“I know that I have done everything that could possibly be done in the circumstances we have faced,” Mr Cooke said.

But Matthew Haupt, the lead portfolio manager at Wilson Asset Management Leaders told The Australian on Sunday the exit was “part of a necessary process for Start to regain their licence.”

Mr Haupt said Mr Cooke’s position had become “untenable” following criticism from the inquiry’s chief commissioner Philip Crawford.

“Obviously it’s sad for Robbie, but I think for the company it’s a move in the right direction and should appease the regulators. They wanted some change and this is part of that change”

Wilson Asset Management is Star’s fifth-largest shareholding with a 2.87 per cent stake, according to Bloomberg records.

Star’s largest shareholder is billionaire publican Bruce Mathieson, who last week increased its stake in the casino operator to 8.21 per cent, from 6 per cent.

Mr Haupt said he expected the market would take the move “very positively” when shares resume trading on Monday morning.

Star’s market value has plummeted from $5bn six years ago to $1.5bn today as the company became embroiled in costly regulatory issues. Its shares closed 2.9 per cent higher on Friday, before the departures were announced.

“Everyone was questioning whether Star would have a licence in Sydney and … I just can’t see how the regulator cannot grant them their licence back given they’ve changed procedures and now the change in the culture,” Mr Haupt said.

An external manager has been running the Sydney casino since October 2022, when an in­dependent inquiry concluded that the gaming giant had set up an “inherently deceptive and unethical process”.

It found the casino had disguised more than $900m as hotel expenses to allow wealthy gamblers to bet at the ­venues and failed to check the source of the money while knowing for years it was in breach of the rules.

Star’s board on Friday acknowledged Mr Cooke’s sudden departure barely a year after his hire was not an ideal situation. But they insisted a leadership change was “in the best interests of the company at this time”.

A number of Mr Cooke’s senior reports will also leave the company, including chief financial officer Christina Katsibouba, who had been appointed in January but had been with Star for nine years in other roles.

Chief of staff Peter Jenkins had been with the company for 10 years and will also depart.

Star chairman David Foster, who also is chair of Bendigo and Adelaide Bank, will take on additional duties as executive chair while a search for a permanent chief executive is conducted.

Mr Cooke will remain a consultant to Star for six months to help with the leadership transition “and provide continuity across business activities,” the company said on Friday.

The restructure comes as Star is also facing regulatory pressure to fix its Queensland casinos ahead of the August opening of its $3.6bn Queen’s Wharf resort.

In his farewell letter to staff, Cooke said he was stepping down with “considerable reluctance and a heavy heart”. He pushed back against a notion he had fallen short in turning the company around after the slew of devastating findings of misconduct at the casino.

He said his team had been “tirelessly committed and absolutely focused on seeing The Star return to suitability” following scandals around illegal activities like money laundering.

The memo appeared to pre-empt a perception that he was being pushed out for failing to enact reforms quickly enough – a key concern raised by NSW regulators who ordered the new inquiry into Star’s fitness to run its Sydney gaming operation.

He directly challenged the view of the state inquiry’s chief commissioner that he was not “moving with sufficient speed” with the necessary reforms and changes. The outgoing CEO said he ”respectfully and fundamentally disagree” with that assessment.

He also disagreed with the commissioner’s views of his decision to retain certain incumbent senior executives, saying there was “no basis to suggest they were bad actors” despite concerns about the executive team.

The sudden restructure has plunged the company into a fresh crisis, and market sources now believe a potential sale to private equity is the most likely outcome.

“Who else is going to run it now with the licence under review?” Hunter Green broker Charlier Green said. ”The most likely outcome is a sale to private equity.“

The gambling group would likely be worth more split up or sold to private equity rather than continuing as a listed company, Mr Green added.

Under the scenario, the property and hotels would be sold off separately to its casino operations. Alternatively, the business could be sold to private equity much like Crown Resorts in 2022 to Blackstone for $8.9bn, Mr Green said.

“A sale to private equity means they can renovate the business in private,” he said.

“And it’s a massive renovation that is needed. Sticking points would be to compensate the shareholders who came in on the way down. The sooner this happens the better.”

Mr Green said that while Blackstone could be interested in folding Star into Crown, the Australian Consumer and Competition Authority would want to look at any such deal.