Star Entertainment Group faces financial crisis
The Australian company is facing liquidity struggles and a lack of confidence from its lenders.
Australia.- Shares of Star Entertainment Group hit a new record low on Thursday as the Australian casino operator grapples with a liquidity crisis and a lack of confidence from its lenders.
In a report released last week, Morningstar analyst Angus Hewitt pointed out that Star had just $AU79m in cash at the end of 2024, down from $AU107m at the close of Q3. At its current burn rate, Hewitt warned that the company might struggle to last until its interim results are due on February 28, 2025, unless it secures additional funding. The company is also facing challenges in tapping into a credit facility that could provide some financial relief.
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Star is finding it difficult to meet the requirements needed to unlock the second $100m tranche of its debt facility, including raising at least $150m in additional subordinated capital, most likely through equity, Hewitt said.
The company is also under investigation in a prolonged anti-money laundering probe, which has placed its flagship venue, The Star Sydney, at risk of losing control. The venue has been under government control since 2022, and the Australian government is also overseeing the operations of Star’s other two venues, The Star Brisbane and The Star Gold Coast. This ongoing scrutiny, along with challenging macroeconomic conditions, has led some analysts to consider Star’s situation as increasingly precarious.
The news of Star’s liquidity struggles comes shortly after it was disclosed that JPMorgan Chase & Co. had sold its 5.47% stake in the company.
