Financial rescue from lenders reportedly imminent for Struggling Star

Lenders of the struggling Star Entertainment Group have reportedly reached a preliminary agreement on a multi-step bailout plan aimed at giving the casino operator a chance to restructure and recover from its financial troubles.

According to the Australian Financial Review, the bailout package includes an initial AU $100 million loan to cover unexpected costs from the recent opening of the Queen’s Wharf Brisbane project. Another AU $100 million could be made available, contingent on Star securing additional capital from other sources.

The plan is designed to buy time for the newly appointed CEO, Steve McCann, who previously led the successful remediation of Crown Resorts before its acquisition by Blackstone. McCann is expected to implement similar reforms to bring Star back to compliance and profitability.

While the lenders have not yet fully approved the bailout, final sign-off is expected soon, pending approval from their respective investment committees.

For Star, the financial support could prevent the sale of one of its three casinos located in Brisbane, Sydney, and the Gold Coast. As part of its recovery strategy, Star is seeking tax relief from the Queensland government—after New South Wales declined—and considering asset write-downs and sales of non-core assets. The business just received AU $67.5 million for the sale of Brisbane’s former Treasury Casino structure.

In total, Star aims to raise up to AU $350 million to address short-term debt and ensure sufficient cash flow. An official announcement on the company’s equity-raising efforts, along with the release of its FY24 financial results, is expected next week, according to a report by IAG.

Star’s precarious financial situation follows a second finding of unsuitability by the NSW Independent Casino Commission, driven by increased compliance costs related to historical failures in anti-money laundering (AML) and responsible gambling, combined with a weaker domestic gaming market and the absence of international high rollers.

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