Star Entertainment Group is facing a renewed liquidity crisis, with its available cash as of December 31, 2024, falling sharply to A$79 million due to rising costs, fines and a challenging external environment.
In an update filed with the Australian Securities Exchange (ASX), Star said its available cash had fallen by A$70 million from the A$149 million it reported on September 30, 2024. Or A$107 million if you include the A$37.1 million in cash it received after drawing down the first A$100 million tranche of its new debt facility in early December.
Most of that tranche went towards paying outstanding fees and expenses.
Access to the second tranche of A$100 million remains contingent on the company meeting the required conditions precedent. However, Star reported that the significant reduction in available cash is due to several factors:
- ongoing challenging trading conditions, as highlighted during the Group’s annual general meeting on 28 November 2024;
- substantial capital expenditures;
- upfront payments related to establishing the New Facility;
- the A$5 million initial payment of the A$15 million penalty imposed by the NSW Independent Casino Commission on 17 October 2024 following its review of the Bell Two report;
- significant legal and advisory fees;
- ongoing transformation and remediation initiatives;
- contributions to joint ventures.
Star added that satisfying the conditions precedent to accessing the second tranche remains challenging and the group continues to explore other liquidity options as it seeks to stay afloat.
The company’s difficult financial position is the result of mounting issues following the Bell investigation in 2022. The report found the company unfit due to serious non-compliance, including the illegal use of China UnionPay cards to fund gambling at The Star Sydney, its dealings with Asian junket operator Suncity Group and the company’s response to independent reviews of its anti-money laundering (AML) and counter-terrorist financing (CTF) measures.
The mandatory rollout of cashless gaming technology and tightening regulatory requirements have led to a sharp increase in operating costs, while visits and player spending, particularly in the premium gaming segment, have fallen sharply.
The Star also faces multiple shareholder class actions and has set aside A$150 million to cover a looming claim from Australia’s anti-money laundering authority AUSTRAC.
While the New South Wales government agreed last year to delay the introduction of a significantly higher tax on poker machine revenues, it recently rejected a request for further assistance.
Star operates three integrated resorts – The Star Sydney in NSW and The Star Gold Coast and The Star Brisbane in Queensland.
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