Star Entertainment’s results are sure to be of interest to the lending and real estate community.
The company is due to report on Thursday and its debt position and asset sale plans will be keenly scrutinised.
The suggestion has been that Star won’t be able to sign off on its accounts as a going concern without a funding injection of some sort, despite raising $800m earlier this year, reducing net debt to $341m from $1.1bn.
But the challenge is that it does not know exactly how much it will need until it knows the size of the fines it has to pay Austrac for breaking Australia’s anti-money laundering and counter-terrorism financing laws.
And when it comes to asset sales, any buyer will want to know that the tenant can pay the rent before writing out a big cheque to acquire assets.
The thinking has always been that 10 per cent shareholder Bruce Mathieson would be an obvious buyer of Star’s casino properties in Sydney and the Gold Coast, should the company need to raise funds urgently.
DataRoom revealed in April that Oaktree Capital was offering funding to Star, along with Bain Capital and Apollo Global Management.
Barrenjoey is working for Star, as revealed by this column earlier.
The question some are asking is whether Star has gone back to its bondholders for additional funds or sourced expensive debt from a credit fund like Oaktree or Bain.
Sources believe that Star Entertainment may need both an equity injection from an opportunistic credit fund and asset sales.
Star raised equity at $1.20 early this year.
It’s share price is now $1.02.
Blackstone purchased Star’s rival, Crown Resorts, last year for $8.9bn, and will no doubt be watching.
In April, Star Entertainment said it was accelerating plans to refinance debt, with a focus on improving its liquidity position and increasing covenant headroom.
The loss-making Star Entertainment has written down its flagship Sydney casino by $988m in light of proposed changes to the NSW casino tax rate.
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