https://www.theaustralian.com.au/business/dataroom/dday-for-star-...

https://www.theaustralian.com.au/business/dataroom/dday-for-star-administration-decision/news-story/491a2e0d94eed5429980a9c29681ef51

Star Entertainment’s future was on a knife edge on Wednesday night, but lenders to distressed companies are hovering and are expected to hear by Thursday if it is entering voluntary administration.

A voluntary administration for the cash-strapped casino operator would enable all of its liabilities to be frozen.

This frees administrators up to work with the company’s assets without having to worry about paying its bills.

Star could then sell assets and find a sustainable way to continue to trade. The alternative is it enters liquidation.

Either way, the proceeds from what’s left in the business are divvied up among non-secured creditors once secured creditors are paid out.

In the case of Star, the secured creditors are its super senior lenders, owed $100m, and there is enough cash in the business to cover that debt.

The secured creditors also have to give their approval for any decisions made by the voluntary administrators.

No doubt the first thing a voluntary administrator will do (in the case of Star Entertainment it will be its existing adviser, FTI Consulting), is request an indemnity for staff payments from premiers in NSW and Queensland where it operates, an indemnity for staff payments.

This, as is the case with the Whyalla Steelworks in South Australia, means the government acts as a guarantee for staff payments in the event that the company cannot meet those payments to enable its 8000-odd workers to stay employed.

In a voluntary administration, Star’s class action would become an unsecured claim, as would gaming tax payments owed to governments and debts owing on Queen’s Wharf in Brisbane.

Normally, in the voluntary administration of a company such as a retailer, the Corporations Act indicates that the ball would be in the administrator’s court whether its lease contracts are cancelled, rather than the landlords themselves.

This could suggest Star’s voluntary administrators may be able to call the shots as to whether the company gets to keep its casino licences.

Star has been suspended from trading after it was unable to sign off on its accounts last week, and as it weighed last-minute recapitalisation options.

These are thought to have included the sale of hotel rooms and the refinancing of $428m of debt with alternative lenders such as Oaktree Capital and other credit funds.

Blackstone is understood to have interest in buying Star’s Gold Coast casino – its most valuable asset.

There is $1.6bn of debt on Star’s Queen’s Wharf hotel and casino complex development in Brisbane, of which it is a joint venture partner with Chow Tai Fook and Far East Consortium.

Star has guaranteed half that debt, which has a repayment date in the second half of this year.