Star Entertainment is poised to write down assets and announce a major cost-cutting program as its new chief executive, Steve McCann, attempts to shore up the struggling casino’s financial position ahead of a release of a critical report into its conduct.The report was authored by Adam Bell SC, who conducted a review into whether Star should keep its lucrative Sydney licence for the NSW casino regulator.The report, which will be released as soon as Friday, is not expected to result in Star losing the licence, with casino instead operating with the oversight of a government-appointed manager r.Star’s lenders have met with the company over concerns about the company’s long-term financial viability ahead of its annual results, also to be released on Friday. Star’s ability to properly fund its operations has been a focus for the Independent Casino Commission’s inquiry led by Mr Bell.People with direct knowledge of the matter, who spoke on the condition of anonymity, said cashless card gaming and increased regulation at a time when patrons were spending less had led to a cost-blow out.Those pressures will be addressed by cost-cutting, along with a write-down in the value of its assets.RELATED QUOTESSGRThe Star Entertainment Group$0.450 -2.17%1 year1 dayAug 23Dec 23Mar 24Aug 240.2000.4000.6000.8001.000Updated: Aug 29, 2024 – 8.58pm. Data is 20 mins delayed.View SGR related articles AdvertisementStar’s Sydney casino in Pyrmont is in the spotlight as Adam Bell, SC, considers whether the company should be given its gaming licence back. BloombergMarket sources with knowledge of the meetings between the company and its lenders said Star was mapping out multiple financial scenarios with lenders in response to the report, which it had not received as of Thursday afternoon.The lenders were locked in meetings until late on Thursday and are also in communication with asset managers including Oaktree Capital Management.One market source with knowledge of the matter said: “Clearly something needs to happen with the balance sheet and that is yet to be resolved.”UBS is advising Star on its talks. Star declined to comment.Star has $450 million of debt, negotiated last September, which sits with lenders including Barclays, Westpac, Deutsche Bank, Macquarie, Perpetual, Soul Pattinson and Regal Partners.AdvertisementThis would not be the first time Oaktree has shown interest in Star. The Australian Financial Review’s Street Talk column reported early last year that the two companies held talks about a near-term capital injection to pay down debt.Mr McCann took the top job at Star earlier this month 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.Public hearings held earlier this year focused on three key issues: the falsification of welfare checks on customers; bulk approval of source-of-wealth checks for high-risk customers; and a $3.2 million loss from a malfunctioning cash-in, cash-out terminal.The inquiry also ran private sessions focusing on the financial viability of the group.Former chief executive Robbie Cooke stepped down before the inquiry, while the board ousted chairman David Foster after he tried to justify his private calls for the scrapping of the regulator and removal of the manager controlling its Sydney licence.Other senior executives to depart this year include chief financial officer Christina Katsibouba, chief customer officer George Hughes and chief legal officer Betty Ivanoff.AdvertisementStar has conceded it is not suitable to operate a casino in its own right, but believes it should be found suitable to run it, subject to conditions.The company hired Mr McCann, who helped remediate Crown, in a last-ditch attempt to maintain its licences in Sydney and Brisbane.The casino group’s shares have fallen almost 50 per cent in the past year and the company has raised emergency equity twice. It is separately facing a multi-million dollar penalty from the financial crimes watchdog for historic breaches of counterterrorism and anti-money laundering laws.Star warned investors in June an exodus of high-rollers, persistent cost-of-living pressures and rising remediation costs would further dent full-year earnings.Star expects to report revenue between $1.68 billion and $1.69 billion and earnings between $165 million and $180 million for the year to June 30. It posted revenues of $1.9 billion and earnings of $317 million in the prior financial year.Star said in June it was accelerating plans to reduce the operating cost base to offset some of the expenses related to remediation and transformation. The group is also reviewing the potential sale of other non-core assets.
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