Casino operator Star Entertainment books $1.69b loss, warns of liquidity woes even with $200m lifeline

Beleaguered Star Entertainment Group has secured a costly $200 million funding lifeline but warns it still faces a “significant” liquidity crisis.

The casino operator on Thursday released its delayed full-year results that showed a statutory loss of $1.685 billion — a better performance from last year’s $2.44b loss — from revenue that fell 10 per cent from a year earlier to $1.678b

Gaming revenue at Star Sydney, Star Gold Coast and Treasury Brisbane — which closed on August 25 to make way for the launch of Star Brisbane — all fell between 8 and 14 per cent from the previous year.

The 2023-24 loss includes an impairment charge of $1.44b as Star battles regulatory challenges that could see the group lose its Sydney gaming licence, a marked slowdown in punter spending amid cost-of-living pressures and soaring operating costs.

Star said trading deteriorated over the second half of the year and the downturn had continued into the start of the new financial year, with big earnings-before-tax losses in both July and August totalling almost $8m.

Star’s shares have been suspended from trade on the Australian Securities Exchange since the end of August after it failed to present its accounts.

An inquiry by NSW gaming authorities last month found the company remained unfit to operate its flagship Sydney casino. It said it needs to be convinced that Star is financially able to run the casino and has a plan to reform its tarnished culture.

Cash-strapped Star also needs more money to invest in the new casino resort at Queens Wharf in Brisbane.

But the company said it still faces “significant near-term liquidity requirements, including the funding of the group’s operations at current trading levels, ongoing remediation and transformation activities” and costs associated with its new Brisbane venture.

After weeks of talks, Star has managed to win a $200m debt facility from unnamed corporate lenders that will come in two highly-conditional tranches. The first will be available from the end of October but will come with an annual interest rate of 13.5 per cent — a similar rate that some distressed builders in China are paying, according to Bloomberg.

The terms of Star’s existing $450m facility were also reset. The limit was reduced to $334m, which is already fully drawn.

Former Crown Resorts and Lendlease boss Steve McCann took the reins as chief executive at Star in June and is widely seen as the company’s best hope to right the ship.

“There are a number of significant challenges currently facing the business from an earnings, liquidity and balance sheet perspective,” Ms McCann said.

“We recognise and appreciate the support provided to date by our stakeholders as The Star puts in place a new management team and strategy to implement a remediation and transformation program, and return the company to a more sustainable footing.

“However, time and flexibility is required to implement these initiatives.”

Star said it was still assessing additional avenues to further support its liquidity, including the sale of non-core asset and other capital sources.

It has $130m cash at hand at the end of August.

“A range of initiatives and other measures have been identified and are being implemented to improve business performance, drive revenue and enhance The Star’s liquidity position,: it said.