Australia’s Star Entertainment Seeks Funding and Tax Relief To Prevent Financial Collapse

The Star Entertainment Group is scrambling to secure vital funding and tax relief since it is reportedly on the brink of financial collapse. The casino operator, which manages venues in Sydney, Brisbane, and the Gold Coast, is urgently negotiating with lenders and requesting tax relief from NSW and Queensland governments. These efforts are crucial as the company attempts to stabilize its financial situation and preserve its casino licenses amid escalating regulatory scrutiny.

The company’s dire situation has been exacerbated by the latest Bell Report, which has raised significant concerns about its suitability to hold a casino license for The Star Sydney. In response to these challenges, Star entered into a trading halt last Friday, August 30, 2024, while the Australian Securities Exchange (ASX) suspended trading of The Star Entertainment Group’s securities

According to the Australian Financial Review, Star Entertainment chief executive Steve McCann is preparing to announce an AU$1.4 billion write-down of its casino assets.

Star Entertainment is exploring various avenues for financial relief. The NSW government had previously agreed to defer a tax increase on poker machines, but the company is now seeking additional relief. To address its urgent liquidity issues, Star is also considering raising up to AU$300 million through convertible notes, which could provide a temporary financial buffer by allowing investors to convert debt into equity.

Operationally, Star has faced mounting difficulties. Compliance costs have surged due to new cashless gaming requirements and stricter regulatory measures, contributing to its financial strain. The company’s Queensland operations have been particularly problematic, highlighted by the closure of the Treasury casino and the partial opening of the Queen’s Wharf development. Despite the high-profile $3.6 billion Queen’s Wharf project, the company’s financial instability overshadows this recent milestone.

Moreover, Star’s problems extend beyond financial management. The company is dealing with increased regulatory scrutiny over its anti-money laundering practices and dealings with junket operators. It has set aside $150 million to cover potential penalties from AUSTRAC, Australia’s financial crime watchdog. Additionally, Star faces class action lawsuits from shareholders and has been forced to raise emergency equity twice in recent years.

Shares in Star Entertainment closed at 45¢ on August 29, 2024.

Read related article: The Star Casino Group Suspended From Trading in Australia