Shares in struggling casino giant Star Entertainment have plummeted by more than 15 per cent after a brief trading halt was lifted on Friday, as the company searches for a financial lifeline to avoid collapsing.
The casino operator entered a trading halt minutes before the Australian share market opened on Friday after failing to post its half-year financial results.
The company, which operates casinos in Brisbane, the Gold Coast and Sydney, has been facing significant financial woes, and has previously warned it was at risk of collapse.
The casino operator was required to post its results before trading started on the Australian Securities Exchange at 10am AEDT on Friday.
At 9:54am on Friday, the ASX announced that trading of Star’s shares would be “temporarily paused pending a further announcement”.
In an update posted to the ASX at 10:31am, the company said it expected to receive “one or more liquidity proposals during the course of today”.
“It is likely that the [half-yearly report] will only be able to be finalised if the company has received liquidity proposals which … are sufficiently capable of being progressed to finalisation in the context of determining whether the company can continue as a going concern,” the statement said.
“If [the half-yearly report] is not lodged later today as required by ASX listing rules, then the company shares will be automatically suspended from trading from Monday, 3 March 2025.
“There remains material uncertainty as to the [company’s] ability to continue as a going concern.“
Trading in Star shares resumed before noon on Friday, but had plummeted by more than 15 per cent by the close of trade to just 11 cents.
On Thursday night, the Australian Financial Review reported that Star’s board was struggling to sign off on accounts that said the company was a going concern.
Star’s share price fell by more than 15 per cent at the close of trade on Friday. (ABC News: Scott Preston)
Casino giant ‘a slow train wreck’
Star has been facing serious operational challenges, and told the ASX in January that had an available cash balance of just $79 million.
The company has been seeking a financial lifeline to avoid collapsing, and was reported to be considering a $650 million debt refinancing offer from Oaktree Capital Management last week.
“If they don’t get a lifeline, ultimately they will have to enter some sort of voluntary administration process,” said Opal Capital Management analyst Omkar Joshi.
“At that point, you probably have a scenario where the assets are sold off, it’s carved up. There are good quality assets in there still, if someone’s starting with a clean slate, then there’s an opportunity for them to go from there.”
Mr Joshi said a series of poor management decisions over a long period of time have contributed to Star’s financial woes.
“It’s been a bit of a slow train wreck, and we’ve seen it play out over a number of years,” he said.
“It’s progressively gotten worse and worse. We’ve had a number of different management teams through it over the years as well, and it’s now at point where they have effectively lost the confidence to be able to raise new equity.
“They can’t really raise new equity funds, they’re also struggling to raise new debt funds, and that really is causing the liquidity problem when you do have a cash flow shortage as well.”
Altogether, Star’s three casinos employ around 9,000 people in New South Wales and Queensland. (AAP: Joel Carrett)
‘Growing level of concern and frustration’ for workers
The heightened prospect of Star entering administration is an added uncertainty for the casino’s employees, with about 9,000 workers employed across its three venues.
“Obviously the financial condition at Star is dire, and our concern is that the company drifts into administration,” Andrew Jones from the United Workers Union said.
“There are two options here. One, where the administrator closes the doors and effectively, our members are out of work,” he said.
“Or, alternatively, the administrator is able to continue to operate the casino whilst they seek to have someone else purchase it.
With the future of the casino having been in limbo for months, Mr Jones said it was taking its toll on Star’s employees.
“There’s been a growing level of concern and frustration amongst workers in Star,” he said.
“Fundamentally, Star workers have been in this place … since September, however these issues go back two to three years with the company.
“So that level of uncertainty, workers have been living with for a long time.
“If the company goes into administration, we do expect the state governments to move quickly to work with that administrator to keep the doors open and to protect those jobs.”
Star’s casino at Queen’s Wharf in Brisbane opened in August last year. (ABC News: Liz Pickering)
Speaking in Brisbane on Friday morning, Queensland Premier David Crisafulli said his government was focused on protecting Star’s employees.
“Debts that are owed must be paid and we are happy to talk about into the future, about opportunities for whoever might run that business, about opportunities to grow and thrive in Queensland,” he said.
“But our non-negotiable is around the people who work there.”
In Sydney, NSW minister Penny Sharpe said the state government has been “closely” watching the developments with the company.
“Star has to maintain itself as a viable casino, that’s something that they have to do,”
she said.
“We’ve obviously been working with them over a period of time on a range of issues, including the importance of the employment that’s there, and we’ll continue to do so.”
In January, NSW Premier Chris Minns said his government had sat down with Star a year earlier to work out a rescue package for the company, but that he does not “have money for casinos”.
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