Australia’s Star Entertainment Group is again facing a liquidity crunch, with the amount of available cash as of 31 December 2024 having plummeted to just AU$79 million due to rising costs, the payment of regulatory fines and difficult trading conditions.
In an update filed with the Australian Securities Exchange (ASX) on Wednesday, Star revealed that its available cash had fallen by AU$70 million from the AU$149 million it reported on 30 September 2024, and by AU$107 million when taking into account the AU$37.1 million in cash it obtained after drawing down the first AU$100 million tranche of a new debt facility in early December.
Much of that tranche went towards paying outstanding fees and costs.
While accessing a second AU$100 million tranche remains dependent upon the company fulfilling conditions precedent, Star said the significant reduction in available cash “reflects the continued difficult trading conditions highlighted at the Group’s Annual General Meeting on 28 November 2024, essential capital expenditure, significant items including upfront fees relating to the establishment of the New Facility, the first AU$5 million instalment of the AU$15 million fine imposed by the NSW Independent Casino Commission on 17 October 2024 following its consideration of the Bell Two Report, significant legal and consulting fees, ongoing transformation and remediation activities, and joint venture contributions.”
Star added that meeting conditions precedent in order to access its second tranche remains challenging, with the group continuing to explore other liquidity options as it scrambles to stay afloat.
The company’s perilous financial state is the result of mounting challenges since the first Bell inquiry in 2022 found the company unsuitable due to serious lack of compliance, including the illegal use of China UnionPay cards to fund gambling at The Star Sydney, its dealings with Asian junket operator Suncity Group and the company’s response to independent audits of its anti-money laundering (AML) and counter terrorism financing (CTF) controls.
The mandatory implementation of cashless gaming technology and increased regulatory requirements have seen operational costs blow out, while visitation and player spend – particularly in the premium gaming segment – has plummeted.
Star is also facing multiple shareholder class actions and has set aside AU$150 million to cover a looming action by Australia’s AML watch dog AUSTRAC.
Although the NSW government last year agreed to defer the implementation of a significantly increased tax on poker machine revenues, it recently rejected a request for further assistance.
Star operates three integrates resorts – The Star Sydney in NSW and The Star Gold Coast and The Star Brisbane in Queensland.
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