Battling casino group hopeful chips will fall its way
A troubled gaming group that owns some of the country’s largest casinos believes its financial woes will improve within days, but a collapse remains a real possibility.
Regulators on Friday signed off on a $300 million rescue package by US-based Bally’s Corp and its investment vehicle for pub baron Bruce Mathieson’s Star Entertainment Group, with the deal expected to convert into equity within days.
This will greatly help Star stay afloat with lenders to whom it owes another $350 million, CEO Steve McCann told shareholders at the company’s annual general meeting on the Gold Coast on Tuesday.
“However, material uncertainty remains regarding the group’s ability to continue operating, with a number of critical milestones ahead,” Mr McCann said.
He added that the road ahead remains very challenging, but there is a plan the team is working on.
Two of the biggest turning points are Star’s ability to convince regulators in NSW and Queensland that it is once again eligible to obtain casino licences, as well as its looming Federal Court sentencing for historic money laundering breaches.
Financial watchdog AUSTRAC demanded a $400 million fine; Star says this amount is well beyond its ability to pay.
The Star’s outgoing chairman, Anne Ward, said the judge had previously indicated he would not expect his decision until September.
“Effectively that means it could pop up at any time,” he said.
“We have no knowledge or information as to where the judge was when he wrote his decision.”
Ms. Ward was re-elected to the board on Tuesday, but plans to resign after the $300 million rescue package is completed, with the final remaining paperwork expected to be completed this week.
Once the deal is completed, Bally’s will own 38 per cent of Star and Mr Mathieson’s Investment Holdings will own 23 per cent.
Mr Ward said the investment was the result of a year-long effort to strengthen the group’s financial position at a time when liquidity was a major challenge.
The money-losing casino group reported a $13 million operating loss for the September quarter and had $168 million in cash on hand as of Sept. 30.
The Star has yet to recover from the money laundering scandal revealed by Nine newspaper and 60 Minutes in 2021; This led regulators to impose strict limits on the game to deter high-stakes players.
At Tuesday’s meeting, many shareholders complained about what they described as intrusive questions about their finances that they had to answer before they were allowed to gamble.
“You are requesting details of gambling winnings, inheritances and now extended gifts, savings, government grants or other assets over the last five years,” one shareholder told the board.
But Mr McCann said the Star had no choice but to reject customers who refused to answer, despite realizing the questions could be intrusive.
“This is a regulatory requirement and our failure to do so is a violation,” he said.
“Each violation may result in a fine of up to $1 million.”
All business of the meeting passed, with shareholders overwhelmingly approving Mr McCann’s $7.5 million executive pay package, which includes base salary and incentive bonuses.
In afternoon trading, Star shares were changing hands at 10.75 cents, up 2.4 percent from Monday. The stock had started the calendar year at around 19 cents.
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