Star reports more heavy losses, warns of continuing threat to liquidity
Star Entertainment’s losses have deepened, underscoring the challenges its new US owners face in turning the troubled business around.
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Star Entertainment Group has reported further heavy losses, underscoring the challenges its new US owners face in turning the troubled business around.
Star reported a statutory net loss in the first half of $302m after significant items of $166m and normalised losses after tax of $136m before significant items.
The company said its trading performance further deteriorated over the period in particular from the introduction of mandatory carded play, cash limits at The Star Sydney and challenging trading conditions.
Star’s group revenue slumped 25 per cent in the first half due to the implementation of casino operating reforms and further loss of market share.
Domestic gaming revenue slumped 32 per cent. Excluding the impact from the closure of Treasury Brisbane Casino, domestic gaming revenue dropped 20 per cent.
Star Entertainment chief executive Steve McCann told investors a $300m buyout offer from US-based casino operator Bally’s Corp and pubs billionaire Bruce Mathieson provides the troubled group with “critical liquidity”.
The deal will see Bally’s and Mr Mathieson attain more than 60 per cent of the group and gain management control.
Mr McCann said the Star remained committed to a prior deal to offload the debt-laden Queen’s Wharf casino precinct to its Hong Kong venture partners.
Mr McCann said the deal would allow the group to reduce debt levels and concentrate on developing its Gold Coast property.
Star’s shares have remained suspended at 11c since March 3 due to its inability to release the results while negotiating a survival deal with lenders and potential suitors.
A $300m buyout deal with US casino mogul Soo Kim’s Bally’s Corp was signed earlier this month rescuing Star from almost certain collapse.
If the deal by the way of an equity injection is approved by shareholders and regulators, Bally’s along with pubs billionaire Bruce Mathieson will emerge with a combined 56 per cent stake in Star, giving them management control.
The deal values Star at around $540m. For comparison, four years ago, Star was worth almost $4.5bn.
The Australian has reported Mr Kim is exploring options to remain involved in Star’s prized Queen’s Wharf casino precinct in Brisbane as either owner or operator. Star signed a deal in March to sell the asset to Hong Kong consortium partners Chow Tai Fook Enterprises and Far East Consortium in a desperate bid to raise cash.
As of April 11, Star said it had available cash of $98m. Bally’s intend to invest $200m and Bruce Mathieson’s Investment Holdings $100m as part of the buyout deal. The Star received the first $100m on April 9 with further proceeds subject to approval of shareholders.
Despite Bally’s rescue offer, Star said there “remains material uncertainty regarding the group’s ability to continue as a going concern.”
Key initiatives critical to the group’s liquidity outlook included completing the Bally’s strategic investment, securing the proceeds from sale of the Sydney Event Centre and completing the transaction entered into with its joint venture partners to exit Queen’s Wharf.
More to come.
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Originally published as Star reports more heavy losses, warns of continuing threat to liquidity
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