Casino operator’s cash stocks dwindle after big loss
Loss-making casino operator Star Entertainment Group’s cash reserves are dwindling, but the company is making progress refinancing its debt in a tough fight to survive.
According to interim results released on Friday night, the group had $130 million in cash as of December 31, down from $234 million six months earlier.
Star reported a half-year operating earnings loss of $7.6 million and suffered a statutory loss of $109.7 million, including significant one-off items of $34 million.
It experienced a net cash outflow from operations of $53 million, spent $22 million on capital expenditures and had financing expenses of $49 million, among other items.
The group’s revenue fell 10 percent to $584.9 million, mainly due to an 18 percent decline in gaming revenue. The Star said this reflected the ongoing impact of reforms that regulators were forced to implement in the wake of the 2021 money laundering scandal.
Domestic gaming revenue at The Star Sydney, which has implemented mandatory card play and a $5,000 daily cash limit, fell 10.6 per cent to $257 million.
Softer trading conditions at Star Sydney continued into the second half, with January revenue down six per cent on the previous year.
Group CEO Bruce Mathieson Jr said Star was streamlining its operations to strengthen its financial position, including managing key support functions at its individual casinos in Sydney, the Gold Coast and Brisbane.
“We continue to pursue appropriate cost-cutting initiatives and are researching and implementing initiatives to attract customers to our properties,” Mr. Mathieson said.
On Friday, Star’s senior lenders Washington H Soul Pattinson, Macquarie, Perpetual and Deutsche Bank once again agreed to waive financial commitments on its debt until March 31, paving the way for a potential refinancing.
Star on Thursday tentatively reached an agreement with WhiteHawk Capital Partners, a Los Angeles-based credit investment manager that specializes in asset-based lending to middle market companies, for refinancing.
According to the financial statements submitted to the stock exchange, Star’s bank loan as of December 31 was $341 million.
Star also cautioned that significant uncertainty remains about the ability of the business to continue as a going concern due to a number of near-term issues that are critical to liquidity and financial outlook.
The biggest unknown in the short term is the fine the Federal Court will impose in a money laundering case brought by Australia’s financial crime watchdog.
AUSTRAC is seeking a $400 million fine for hosting known criminal syndicates, while Star says it can only pay around $100 million before being pushed into administration.
It is unknown when the Federal Court will rule on this issue.
Shares in Star, which declined AAP’s request for an interview, were flat at 12.5 cents in midday trading after falling to 12 cents in morning trade.
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