Star Ent. flags ‘limited funding options’ as group posts Q2 loss

Ansh Pandey January 20, 2025
Star Ent. flags ‘limited funding options’ as group posts Q2 loss

Australia’s Star Entertainment Group has once again echoed about its financial future, citing limited avenues to secure additional liquidity. The company disclosed that as of 31 December 2024, it had just AU$79 million (€47.8 million) in available cash, following a significant drawdown of a AU$100 million (€60.3 million) debt facility earlier that month. 

While a second tranche of AU$100 million (€60.3 million) is technically available under its New Facility agreement, the company states that fulfilling the conditions required to access these funds still remains a challenge. 

A key hurdle is raising AU$150 million (€90.4 million) in subordinated debt, which Star admits is “limited in the short term without additional liquidity solutions.” In its filing with the Australian Securities Exchange (ASX), Star confirmed it is actively exploring other funding options to stave off potential liquidation.

Q2 results alarm analysts

However, analysts and market watchers remain sceptical, with some suggesting the company may not survive long enough to announce its half-year results in February 2025.

The company’s financial woes come against the backdrop of prolonged regulatory scrutiny, which has exacerbated Star’s operational challenges. Regulatory measures, including mandatory carded play and cash limits in New South Wales, have further dampened revenues.

For the December 2024 quarter, Star Entertainment Group reported a narrowed EBITDA loss of AU$8 million ( €4.78 million), improving from an AU$18 million (€10.75 million) loss in the prior quarter. Quarterly revenue declined by 15 percent sequentially to AU$299 million (€178.88 million), highlighting ongoing operational challenges.

Despite these figures, the company noted a positive turn in November and December 2024, achieving EBITDA breakeven during those months due to its cost-cutting measures and seasonally stronger December revenue.

Shares plummet amid negative outlook

“The results for the period reflect continued weakness in the operating performance of the Group due to the ongoing challenging consumer environment,” the company stated. It also pointed to costs associated with remediation efforts as a significant burden.

Adding to investor concerns, Star acknowledged recent media reports about the potential invocation of safe harbour provisions. These provisions, aimed at protecting directors from personal liability, underscore the severity of the company’s financial troubles.

Star’s shares fell 3.6 percent to AU$0.135 by Monday’s close, significantly underperforming the broader ASX 200 index, which rose 0.4 percent.

Despite signs of improvement in some areas, Star’s outlook remains grim. Without swift and effective action to secure liquidity, the company faces the possibility of restructuring.

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