Star Entertainment Group has announced a significant financial assistance facility to stabilise its operations amid challenging economic times and regulatory pressures.
The confirmation was made in an update to the Australian Securities Exchange (ASX). The move is intended to provide immediate relief as the company faces declining revenues, rising costs and mounting fines.
The facility, split into two A$100 million tranches, will be available until 20 December 2024. The arrangement includes a waiver from lenders to review covenants that were due on 31 December 2023, mitigating short-term financial pressures.
In the 2024 annual report, chairwoman Anne Ward emphasised that the company knows it needs to rebuild stakeholder and regulatory confidence. She added that the financial support is critical to The Star’s ongoing recovery and operational resilience.
The Star’s financial difficulties have become apparent, with the company reporting an 18% year-on-year drop in revenue in its Q1 FY25 financial results. Revenue fell to A$351 million, while statutory EBITDA fell 130%.
This resulted in a loss of A$18 million. These figures reflect a continuation of the financial problems of the previous financial year, when EBITDA fell 45%.
The company attributes its financial difficulties to several factors, including rising living costs impacting consumer spending, compliance costs and regulatory fines.
In October, The Star Sydney was fined A$15 million by the NSW Independent Casino Commission (NICC) for non-compliance, further stretching its resources.
To address these issues, The Star has embarked on a restructuring of its operations. A key component of the strategy was the permanent closure of the old Treasury Brisbane Hotel earlier this year. This allowed the company to focus resources on the phased opening of The Star Brisbane, a flagship project integral to its growth plans.
Designed to be a major entertainment destination, The Star Brisbane represents an important opportunity for the company to rebuild. However, its development is complicated by financial constraints and increased regulatory scrutiny.
The new facility will play an important role in funding the project, maintaining core operations and meeting regulatory requirements during this transition period.
The facility marks a significant step for The Star as it seeks to regain stakeholder confidence and position itself for long-term growth.
The future of The Star depends on its ability to navigate challenges through strategic projects such as The Star Brisbane. The A$200 million facility provides the company with important support to stabilise and restructure its operations.
Success will ultimately depend on how well the operator meets regulatory requirements, manages costs and improves operational efficiency. This success could also help restore investor confidence.
Star’s share price has fallen over the past 30 days. On October 28, the shares were trading at around A$0.27, before falling to A$0.21 by November 4. They have remained around that level since then, despite some minor adjustments.
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