Star Entertainment chief Steve McCann mulls options in $150m funds target

Star Entertainment Group chief executive Steve McCann.

Star Entertainment CEO Steve McCann is believed to be targeting institutional and strategic investors to secure the $150m needed by Christmas to convince the embattled casino operator’s lenders to provide more money.

Sources interpret this as the real estate-turned casino boss looking at options that would include a potential convertible bond, but also an equity placement from a strategic investor such as Bruce Mathieson or another casino operator or property group.

Alternatively, it could offer a further signal that a sale of properties are being explored.

This could include to investors such as Charter Hall or others, but the properties are only as valuable as the operating company.

There has been talk in the past that Star shareholder Mr Mathieson, a wealthy publican, would be a keen owner of Star’s Gold Coast asset.

Mr McCann will need to provide investors with an update at Star’s annual general meeting on November 28 being held at its newly opened Queen’s Wharf development at Brisbane.

As previously reported, Star gets $100m of new debt from its lenders up front 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’s shares last traded at 27c 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 in earnings before interest, tax, depreciation and amortisation, and a $1.7bn loss after significant items including regulatory changes.