Having been suspended from trading on the ASX at the start of September for failing to lodge its financial results, the business spent almost the last month liaising with stakeholders and advisors “in respect of its financial position”.
The Star has now secured $200 million in loans from lenders while also closing out a sale of the Treasury Casino building in Brisbane to Griffith University, for $67.5 million, pocketing $60.7 million after settlement adjustments.
The group’s financial results put revenue down by 10 per cent, due to cost of living pressures which reduced consumer spending, required operational reforms and loss of market share. Notably, non-gaming revenue fell significantly less than gaming revenue.
Before tax earnings for The Star were down 45 per cent.
The group also had over $1.5 billion in significant expenses, before tax, ranging from regulatory and legal expenses to investment in the Queen’s Wharf development, fines, redundancy and employment costs and debt refinancing costs.
“There are a number of significant challenges currently facing the business from an earnings, liquidity and balance sheet perspective,” said The Star’s new group CEO, Steve McCann.
“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.
“We have identified a range of initiatives to improve business performance and cashflow, as well as providing the organisation with additional liquidity. However, time and flexibility is required to implement these initiatives.
“As we work through these initiatives, the board and management team remain focused on demonstrating suitability to hold our casino licenses and regaining the trust and support of our regulators and the broader community while seeking to enhance shareholder value,” he said.
Events and conferences have been identified as one of the revenue generating opportunities.
The results come as The Star was again found unsuitable to hold a casino licence in New South Wales, after a second inquiry into its operations this year.
However the NSW Independent Casino Commission (NICC) did note the improvement in transparency and cooperation since a number of new hires began at The Star recently, including McCann.
Following the findings of the second inquiry, the NICC issued a show cause notice to The Star asking it to explain why it should not be subject to further disciplinary action, including possible cancellation of its casino licence and fines of up to $100 million. The Star has responded and the NICC says it will make an announcement sometime this month addressing the findings of the second inquiry and any resulting disciplinary outcomes.
The Star was not alone in posting a loss amongst local integrated resort operators. Although Crown Resorts’ finances are somewhat opaque now that it is in the hands of private equity, SkyCity Entertainment Group, which runs casinos and hospitality offerings in Adelaide and New Zealand, also posted a $143 million post-tax loss for last financial year.
Both The Star and SkyCity control significant amounts of event space and large inventories of luxury hotel rooms used by the business events industry. SkyCity is expected to open the New Zealand International Convention Centre (NZICC) next year.
