The company is currently working to meet the conditions needed to draw down the second tranche of the facility
The Star Entertainment Group, an Australian casino & hospitality company, has published its financial report for the second quarter of the fiscal year. As the operator’s struggles continue, it reported “limited” opportunities to raise funding in the absence of liquidity solutions.
Profits Went Down, EBITDA Loss Narrowed
In the three months ended December 31, Star Entertainment posted revenue of AUD 299 million ($187.5 million), down 15% quarter-on-quarter. In addition to that, the company reported an EBITDA loss of AUD 8 million ($5.02 million), representing a significant improvement from the AUD 18 million loss in Q1.
The company attributed the decline in revenue to several factors, including the closure of its Treasury Brisbane property and the introduction of mandatory carded play and cash limits across The Star Sydney. The decline was partially offset by revenue growth at The Star Gold Coast, the group clarified.
In the meantime, lower corporate costs and the closure of Treasury Brisbane led to an 18% decrease in operating expenses to AUD 52 million ($32.6 million). In the meantime, the company commenced its phased opening of The Star Brisbane, its newest property.
As of December 31, 2024, the group had AUD 78 million ($48.9 million) in cash (AUD 79 million including restricted cash).
Star’s Debt-Raising Capacity Is “Limited in the Short Term”
In the meantime, Star Entertainment drew the first AUD 100 million ($62.7 million) tranche of its new facility. The company is currently working to meet the conditions needed to draw down the second tranche of the facility.
However, some of the conditions for the second tranche remain elusive. The group reported that its capacity to raise AUD 150 million of subordinated debt is “limited in the short term in the absence of additional liquidity solutions.”
Star Entertainment’s leadership, aware of the precarious financial position of the company, is currently seeking external advice.
The Rapid Decline in Cash Worried Investors
In the meantime, the rapid decline in available cash caused the company’s shares to plummet. Earlier this month, the embattled casino operator reported AUD 79 million in available cash as of December 31, 2024, marking a staggering drop of AUD 70 million from the AUD 149 million reported at the end of September.
This significant decline added to Star Entertainment’s woes, raising concerns about its business and capability to fulfill the conditions needed to draw the second tranche of its new facility.
To make matters worse, recent reports suggested that the group might not be able to make it past February unless it receives external help.
Star’s Remediation Efforts Have Been Mixed
The Star Entertainment Group’s struggles began a few years ago when regulators identified significant regulatory violations. The company C-suite appeared to have lax oversight of the fraud that was taking place in its properties, forcing a chain of leadership changes and the introduction of a remediation plan.
However, the company has found it somewhat difficult to fully adapt to the changes outlined in its remediation plan. As investors started to lose patience, Star’s CEO asked them to consider the fact that the company’s progress had been impeded by unfavorable regulatory changes in Australia.
