Bruce still loves it.
Star shares plunge amid job cuts, review

Lucas BairdReporter

Updated Apr 19, 2023 – 10.56am,first published at 9.52am

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Star Entertainment has put its flagship Sydney casino up for review and will cut 500 jobs group-wide, cancel executive bonuses this financial year, and freeze salaries.

The company, which also downgraded underlying earnings for financial 2023 to between $280 million and $310 million, appointed investment bank Barrenjoey to lead the review, which will “consider any structural alternatives available to maximise value for the group’s shareholders”.

Star said there had been a “significant and rapid deterioration in operating conditions” following damaging inquiries. Louise Kennerley

It conceded there had been a “significant and rapid deterioration in operating conditions” following damaging inquiries in NSW and Queensland that found Star unfit for holding its casino licences.

“Emerging weakness in consumer discretionary spending” was also cited as playing a significant role.

“The Star Sydney continues to operate in an uneven competitive environment as it relates to the regulatory settings for complimentary services in its private gaming areas,” the company told the ASX.

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Star’s shares cratered nearly 10 per cent lower to $1.22 at the market’s open, making it the worst performing stock on the ASX. Still, major shareholder Bruce Mathieson said he was “relaxed” about the update.

Hotelier Bruce Mathieson has emerged as a major shareholder in Star. Arsineh Houspian

“I don’t think it does any harm to look at it,” the pub baron said about the prospect of a full or part-sale of Star Sydney. “If you do it or not is an entirely different thing – you should know the whole base of the business and it’s no difference if it’s a hotel or a casino, or if you need to sell or if you don’t.”

Mr Mathieson has repeatedly made clear his long-term interest in the Star, in which he took a 9.97 per cent stake in February’s $800 million capital raising, is based largely on the value of its core casino assets.

Asked how this view would change if the strategic review urged Star to sell the Sydney facility, he said such an outcome was “a very long way off”.

“It doesn’t do anyone any harm, under these circumstances, to look at everything, and there’s no use worrying about [it],” Mr Mathieson said.

“To me, all this is not unexpected at all. The thing [Star Sydney] is still working under very strict restrictions due to the restrictions that have come in due to the actions of other people, not those who are running it now.”

The job cuts would exclude risk management roles.

Gold Coast sale

The company is “continuing to progress the proposed sale” of the Sheraton Grand Mirage Resort on the Gold Coast, with indicative bids due shortly.

“The group is accelerating its previously foreshadowed plans to refinance its existing debt funding arrangements, with a focus on improving the group’s liquidity position and separately increasing covenant headroom in light of the group’s current earnings environment,” it said.

“To help improve the group’s liquidity position and maximise the prospects of a successful refinancing given the challenging operating environment, The Star intends to engage with the NSW Government, the Queensland Government and AUSTRAC in respect of casino duty rates and flexibility on payment terms in relation to any current and future penalties,” Star said.

The announcement comes after the new NSW government said it would conduct an urgent review of proposed casino tax increases, which have already seen Star write down the value of its Sydney casino by $988 million.

Star has faced 12 months of intense scrutiny as regulatory probes found it misled regulators on money laundering, engaged in “inherently deceptive and unethical” conduct, and knowingly allowed criminals to do business at its casinos in NSW and Queensland.

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