Star Entertainment warns of imminent collapse

Embattled casino group Star has warned it is on the financial precipice, following a new financial update to the Australian Securities Exchange.

In announcing a 15 per cent slump in revenues and a $8 million loss for the second quarter, Star declared it was struggling to find the necessary capital to obtain the second tranche of a critically needed $100m bailout loan.

Attempts to find other financial solutions had so far failed to eventuate, Star said.

“There is no certainty that any of these negotiations will result in one or more definitive arrangements that might materially increase the Group’s liquidity position,” the company statement said.

“In the absence of one or more of those arrangements, there remains material uncertainty as to the Group’s ability to continue as a going concern.”

Star’s directors have confirmed they have sought ‘safe harbour’ protection under the Corporations Act to indemnify them from personal liability should the company go insolvent while it continues to trade on the ASX.

Star’s hopes are increasingly for a government handout from the NSW or Queensland state governments, but NSW Premier Chris Minns ruled out intervention.

“We don’t have any (more assistance). We did sit down with Star over a year ago and work out a rescue package,” Mr Minns told reporters on Sunday.

“We’ve got funding requests right across NSW, from roads to psychiatrists to nurses to the railways. I mean, I don’t have money for casinos, I’m sorry.”

Queensland Premier David Crisafulli was more supportive, telling reporters that the state’s interests were in “support... for the workers and making sure that casino continues to operate. I am confident we can find a way to make that occur that represents a good deal for all Queenslanders.”

Mr Crisafulli said, however, that the onus was on Star to find a financial solution.

“I want Queenslanders to know we are not tipping money into the company. It is not our issue.

“I don’t reckon there are many Queenslanders that care about Star or its CEO or board but there are bucketloads that would care about the facility and people who work there,” he said.

Star’s quarterly activities report show a parlous financial state, with revenues cratering across its casinos.

Revenues were down $50m in the last quarter alone as mandatory limits and cashless gambling rules were introduced.

Compared to the same time last year, revenues were down by 32 per cent, dropping from $438m to $299m. Earnings had also been affected by the sale of its Treasury Brisbane casino to Griffith University as it raised much-needed funds.

Earnings before interest tax, depreciation and amortisation plunged by nearly $60m compared to a year ago, with the company posting an $8m loss for the quarter to 31 December. That left it with just $78m in the bank at the end of December.

Star’s shares fell almost 6 per cent in morning trading on the update to be down 96 per cent since the stock’s high-watermark in September 2021.

Facing regulatory hurdles and fines linked to a series of scandals involving the concealment of criminally-linked junket operators, operation of a secret gambling room, and regulatory breaches that saw it almost lose its NSW licence, the company has been bleeding cash amid a collapse in high-roller revenue and a reduction in takings from its gaming floor. The company is also strained by debt repayments for its costly multi-billion dollar development of Queen’s Wharf Brisbane casino precinct.

Star is still to pay the remaining $10m of a $15m fine levied by the NSW regulator, while it awaits the final determination on the size of the fine from money-laundering regulator AUSTRAC, which Morningstar estimates at $330m.

Based on the cash burn rate, Morningstar analyst said there was a 50 per cent chance the company’s shareholders would be wiped out in the event of the firm falling into administration. Morningstar analyst, Angus Hewitt suggested that without a lifeline, “the company would be lucky to make it to its interim results on February 28, 2025.”

Star’s shares had rebounded in recent days when it was revealed a Macau-based billionaire, Xingchun Wang was buying up stakes in the group to amass a 6.52 per cent holding worth $35m

The Australian Financial Review tracked Mr Wang to a number of addresses in Hong Kong and Macau to determine that he was a coal baron who had made his fortune importing Mongolian and Russian coal to China. Mr Wang has links to Hong Kong-based Chow Tai Fook and Far East Consortium, one of Star’s investment partners in the Brisabane Queen’s Wharf development.