Star Entertainment Group is expected to reveal its annual results on Wednesday next week and new funding arrangements critical to the survival of the embattled casino operator before resuming trade on the Australian Securities Exchange two days later.
DataRoom understands that Star, which owns casinos in Sydney, Brisbane and on the Gold Coast, has agreed terms with lenders to secure an additional $100m initially and potentially a further $100m in the future as part of an arrangement to keep the company afloat.
As part of that deal, a $150m working capital facility currently in place - $30m of which has been drawn – will be cancelled by the lending syndicate.
The fresh $100m of funding to be offered immediately by existing lenders would become ‘super senior debt’ where the lenders would be first to be paid back in the event of a default, behind the current loans, and would come at a higher cost than existing loans.
The second $100m being offered will be contingent on various conditions, which is likely to include an equity raising, probably through convertible notes, but that would likely happen at some point in the future.
Star also has a Term Loan B loan worth about $300m.
The casino operator is suspended from trading, and the understanding is that the shares will resume trading next Friday, two days after it hands down its results for the year to June, providing investors two days to digest the information.
Star’s lending syndicate is led by Macquarie Group, along with Deutsche Bank.
Others in the group include Soul Patts, Perpetual, Barclays, Regal and ARCM.
It is understood that Star’s debt in the secondary market is trading at 90c in the dollar or less.
Working for the casino operator is investment bank Barrenjoey.
Stakeholders will be watching Star’s share price closely next Friday when it resumes trade, with the stock currently at 45c and Star’s market value at $1.3bn, and some betting it may fall as low as 20c, taking its market value to about $600m, less than half the value of its real estate portfolio.
Major shareholders include billionaire publican Bruce Mathieson with close to 10 per cent and Wilson Asset Management, which holds about 4 per cent of the stock.
Star’s recently appointed chief executive, Steve McCann, who used to run the Blackstone-owned rival Crown Resorts, has been working with regulators and lenders to support the casino operator as it faces cost overruns at the new $3.6bn Queen’s Wharf project in Brisbane that opened in recent weeks.
It has been in need of an additional $300m to survive.
Delays and compliance costs have plagued Star, which has faced losing its casino licence after breaching money laundering regulations at its premises.
A second damning report from the NSW Independent Casino Commission was recently released, with chief commissioner Philip Crawford saying the company “had not moved quickly enough to address the governance and cultural concerns raised in the first … report”.
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