Investors refuse to catch a falling Star as embattled casino operator cops a hammering on return to trade

Shares in embattled Star Entertainment Group have been obliterated on their return to the Australian Securities Exchange, with almost half of the casino operator’s market value wiped out in a matter of minutes.

The stock was down 46 per cent to a record low of 24¢ half an hour after the opening bell on Friday. At that price, the company is now valued at just under $690 million.

Star has not traded on the ASX since the end of August after it failed to present its accounts.

More than 320 million shares changed hands, compared to between 3 million and 26 million that were traded each day in the two weeks before the suspension.

The company has faced myriad regulatory and financial problems, which culminated in it yesterday booking a statutory loss of $1.685 billion for the past financial year and warning investors it still faces a “significant” liquidity crisis.

Star also faces the prospect of losing its Sydney gaming licence after NSW gaming authorities last month found it remained unfit to operate its flagship casino.

The 2023-24 loss — detailed in the delayed results published on Thursday — included an impairment charge of $1.44b against the value of its Sydney, Gold Coast and Brisbane casinos.

Star blamed the abysmal performance on a marked slowdown in punter spending amid cost-of-living pressures and soaring operating costs. Reforms such as mandatory breaks have also resulted in a poor customer experience and kept people away.

Since the introduction of mandatory carded play and $5000 cash limits in Sydney on August 19, average daily revenue had fallen another 10.7 per cent, compared to the four weeks prior.

That performance has carried through to the first two months of the new financial year and earning-before-tax losses amounted to almost $8 million.

Star said it was now looking at slashing hundreds of jobs and selling off non-core assets to stay afloat.

After weeks of talks, it has also 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 junk-bond rate usually reserved for distressed borrowers. according to Bloomberg.

“Look at that interest rate. That’s loan-shark territory,” said Leo Partridge, an analyst at Morgans Financial in Brisbane. “It can definitely get worse from here.”

Liquidity is key measure for the NSW gaming regulator, which needs to be convinced Star is financially viable to continue to run the Sydney casino.

Even with the emergency cash boost, Star says its financial woes are far from over.

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

The former Crown Resorts and Lendlease boss took the reins at Star in June and is widely seen as the company’s best hope to right the ship.

“The list of issues for Star to navigate continues to grow,” Simon Thackray, an analyst at Jefferies (Australia), said in a report. “At this point in time, we see considerable uncertainty.”

Mr Thackray said the focus should be on Star’s ability to service its debt “given a deteriorating earnings base that is under structural pressure on both revenue and costs”.