....how could a casino lose money and get into such a financial mess?
....anyone would have thought that casino operations are money printers, at least that was the conventional view.
...SGR has only been going south since 2018, now just slightly above 8% of what it was worth in Jan 2018 (6+ years ago)
...casino operations are lucrative by nature, it is management that usually muck it up.
...which is why Better for Longer is NOT a guarantee, not even for a business we reckon to be a traditionally strong cashflow generator.
...I always reckon its best to ditch the dog stock early before it starts to show you more fleas. Holding onto a losing position in the hope of an eventual recovery could land one with a permanent disastrous loss. Settling for a small loss enables one to fight another day. Capital trapped in a loser is and opportunity forgone with what that capital albeit reduced, could do (invested) elsewhere.
...this is a textbook case of not Buying and Hodling with Hopium.
Star asks lenders for relief and money to secure financial future Zoe Samios and Anthony Macdonald
Sep 1, 2024 – 8.00pm
Star Entertainment has asked lenders to relax rules on loan repayments and explore liquidity options as it tries to shore up its financial viability and execute a new strategy under recently installed chief executive Steve McCann.
The group, which operates casinos in Sydney, the Gold Coast and Brisbane, has also asked the NSW and Queensland governments for tax relief as part of a wider financing package designed to shore up its near-term finance.
Sources close to the casino operator said it was locked in talks with its lenders, governments and investors, as the board was due to sign its June 30 financial accounts. Star is seeking near-term financing to help it trade through an uncertain market over next six months and retain its casino licence in Sydney.
As of Sunday afternoon, no deal had been struck with any lenders, investors or governments. Star declined to comment.
Star shares were halted on Friday after the release of a report authored by Adam Bell, SC, into its ability to run the Sydney casino precinct. The halt also came hours after a report in The Australian Financial Reviewthat it was preparing to announce a $1.4 billion write-down of its casino assets and a major cost-cutting program.
The Financial Review’s Street Talk column revealed last Thursday that the company’s financial accounts had not been signed off by auditors, and other market sources said Star was mapping out multiple scenarios and had engaged with asset managers including Oaktree Capital Management.
Star shareholders, including billionaire publican Bruce Mathieson, Perpetual, Wilson Asset Management and Soul Patts, were also contacted last week about a convertible notes issue to raise as much as $300 million.
A convertible note is a loan that can be converted into shares at a later date.
Market sources said that is just one option that has been floated – others include an increase in the amount of money in the existing debt facility or the creation of another facility.
The company has also spoken with stakeholders in NSW and Queensland governments about temporary relief on tax repayments, though no decision has been made. This is not the first time Star has asked for government tax assistance.
Last August, NSW agreed to defer the full implementation of a tax increase on poker machines in casinos until the end of the decade through an arrangement that requires Star to maintain more than 3000 jobs until at least 2030.
In early August, the government decided to delay Star’s transition to carded play – where patrons are forced to preload a card with money to gamble – until October. It will also give Star and its rival Crown Resorts more time to implement the changes, allowing patrons to gamble up to $5000 in one session instead of being limited to $1000.
The casino group’s ability to properly fund its operations was a focus of Mr Bell’s inquiry and Star has a long list of potential financial issues. Cost blowout
Cashless card gaming and increased regulation at a time when patrons were spending less has led to a cost blowout during a wider economic slowdown.
Compliance costs – which could increase following the second Bell report – are another major issue, as is its Queensland operations.
Star closed its fully owned Treasury casino in Brisbane last weekend – the company’s second-biggest earner in the six months to December 31 – and opened its part-owned Queen’s Wharf. The casino giant has flagged plans to sell its Treasury casino, hotel and car park, and the Festival Car Park in Brisbane, but these divestments could take months.
Star is also still waiting for its penalty from the financial crime regulator for breaches of anti-money laundering laws, for which it has set aside $150 million.
Mr McCann took the top job at Star in July after its previous management – and board – resigned as the Bell inquiry heard allegations that they had a poor relationship with the regulator and a government-installed manager.
Former chief executive Robbie Cooke stepped down before the inquiry, and chairman David Foster was ousted after he tried to justify his private calls to scrap the regulator and remove a government-appointed manager overseeing the Sydney licence.
Other senior executives to depart included chief financial officer Christina Katsibouba, chief customer officer George Hughes and chief legal officer Betty Ivanoff.
The casino group’s shares have fallen almost 50 per cent in the past year and the company has raised emergency equity twice. At its peak in 2018, Star had a market capitalisation of $5 billion. It is now $1.3 billion.
Shares in Star Entertainment closed at 45¢ on Thursday.
