Star to slash hundreds of jobs, sell hotels in bid for survival

Star Entertainment is looking to cut up to 350 jobs and offload hotels after warning it faces significant liquidity challenges, even with $200m in emergency funding.

Star said it was slashing $1.44bn from the value of its casinos after reporting its long-delayed annual results on Thursday.

Troubled gaming operator Star Entertainment is looking to slash up to 350 jobs and offload hotels and other assets after warning it faces significant liquidity challenges – even with $200m in emergency funding.

Star, which has been teetering on the edge of a financial collapse due to a $300m cash crunch, said it was slashing $1.44bn from the value of its casinos after reporting its long-delayed annual results on Thursday.

Chief executive Steve McCann said he needed to turn around the business and drive up to $100m in costs out of the business.

“We have had a tough time for a while and as you can see this business has been on its knees,” said Mr McCann, a former boss of rival Crown Resorts who joined Star in June.

Mr McCann said the business faced a number of significant challenges from an “earnings, liquidity and balance sheet perspective”.

Up to 30 per cent of group corporate roles could go – equal to about 350 jobs – as well as salary freezes and cancellation of bonuses to help bring costs under ­control.

“In some areas it could be a third of our (corporate) headcount, but I don’t want to get into too many details, given it’s people’s jobs we are talking about,” he said.

Star shares will resume trading on Friday after being suspended in early September due to a failure to lodge its results on time.

Earlier this month it agreed to sell its interest in the Treasury casino building in Brisbane to Griffith University for $67.5m in a grab for much-needed cash.

The sale of the adjacent Treasury hotel and carpark is expected to be completed in the second half of the year.

Mr McCann said other assets that could be offloaded included the luxury Darling hotel properties on the Gold Coast and in Sydney, carparks and an event centre.

The Star casino and event centre in Sydney.

“We have already been approached about the Darling Sydney,” he said. “There are assets like carparks, but I think we have to do a bit more work on the impact on revenue before we put those sorts of assets up for sale.”

Star reported 2024 losses of $1.69bn after a $2.44bn loss in the prior corresponding period, as it continues to battle regulatory costs and challenging trading ­conditions.

Mr McCann said Star would be required to invest a further $358m in the new $3.6bn Queens Wharf precinct in Brisbane, with the facility expected to run at an operating loss until it reached full capacity. “There is a fair way to get to full capacity utilisation at Queen’s Wharf with a number of food and beverage outlets still to open,” Mr McCann said.

The Star, which on Wednesday night announced a $200m financial rescue package, had available cash of $130m at the end of August but faces “significant near-term liquidity requirements” including the funding of ongoing remediation and transformation activities.

Mr McCann said the funds, which attracted an interest rate of 13.5 per cent, would give the company a “liquidity runway” until late in 2025, at which time it would be required to refinance debt on Queen’s Wharf.

The Queensland government meanwhile has threatened to pull out of plans to provide tax relief for troubled Star Entertainment, unless the company gave up plans to reward executives with generous bonuses.

Premier Steven Miles said the government had no role in securing Star’s lifeline, and it was unlikely to reach any kind of agreement on a deferral of tax payments.

“There’s been no agreement whatsoever reached there, and we’re unlikely to reach one,” Mr Miles said.

“Frankly, I find it astounding that they would be asking the state to defer taxes, to delay the payment of taxes while paying themselves performance bonuses. We’re going to put the taxpayers of Queensland ahead of those executives.”

Mr Miles said any possibility of a future agreement would involve a tax deferral arrangement only. “There may be consideration of the timeframe in which they could be paid, or should be paid, but we won’t be entertaining that discussion until they agree not to pay performance bonuses,” he said.

“We want every single dollar of tax to be paid.”

A Star spokesman said it remained in negotiations with the Queensland government regarding a numbers of issues.

“We respect their position and are hopeful of achieving the right outcomes to ensure the long-term sustainability of the business,” the spokesman said.

Star Entertainment Group chief executive Steve McCann.

Veteran Queensland stockbroker and fund manager Charlie Green, director of Hunter Green IB, said it may be time to pull the plug on Star’s life support machine, which had become an “omnishambles.” Mr Green, who does not own Star shares, said he was surprised that asset sales were not being more vigorously pursued by Star, given the “loan shark” 13.5 per cent interest rates attached to the rescue plan.

“Put it this way: most people I know running a family budget would be looking to sell assets rather than borrow at these sorts of interest rates,” he said.

“The board has a Sisyphean task ahead, so it’s time to regroup and pull the plug on new management.”

The NSW Independent Casino Commission (NICC) earlier this month issued a show cause notice against Star that could result in the loss of its Sydney casino licence and a $100m fine.

That followed findings of regulatory failures by Adam Bell SC in his second inquiry into the company.

Mr McCann said he expected the company to retain its Sydney licence on a conditional basis until it could prove its suitability. He conceded Star needed to work better with regulators to reduce financial crime and problem gambling and prove “it’s a trusted operator”.

Mr McCann said Star would respond to the findings of the Bell II report on Friday and conceded the company had a lot of work to do to ensure regulatory approval.

Star said its trading performance had worsened over the second half of the last financial year and this trend has continued since the start of July. For the months of July and August, it had incurred losses of $6.6m and $1.1m respectively, as operating expenses were driven higher by an increase in ongoing transformation and remediation-related activities.

The company’s group revenue for the year declined 10 per cent due to cost-of-living pressures as well as casino operating reforms and loss of market share.