Star Entertainment’s lenders may extend the deadline for the casino operator to come up with the $150m it needs to raise as a condition for them providing an additional $100m of debt, say sources.
The current deal on the table is that Star has until December to raise the funds, but sources say no party wins if it cannot come up with the money by then and the casino operator cannot keep trading, so lenders may push out the deadline.
In recent weeks, Star has indicated that it can raise the funds within the time frame provided.
But the feedback around the market is that a number of players earlier prepared to tip in money are no longer keen to do so due to uncertainty surrounding further debts of $800m linked to Star’s Brisbane development which are due to be repaid next year.
Also, the extent of fines from Austrac for breaching money-laundering laws are not yet known.
Investment bank UBS is working for Star Entertainment.
As previously reported, Star gets $100m of new debt from its lenders upfront and a second $100m by December, but only if it can meet certain conditions.
One of them involves securing additional funding, probably by way of a subordinated loan – a convertible bond or convertible note where fixed income debt can be converted into equity. Star, which owns casinos in Sydney, Brisbane and the Gold Coast, last traded at 26c with its market value at $760m.
Lenders are charging Star an interest rate of 13.5 per cent, versus 10.35 per cent beforehand.
Star reported $1.7bn of annual revenue for the year to June, $175m earnings before interest, tax, depreciation and amortisation, as earlier flagged, and a $1.7bn loss after significant items including regulatory changes
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