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The Star clinches $129 million debt amid mounting financial struggles
The Star Entertainment Group has secured AU$200 million ($129 million) debt facility to stabilise its operations as it battles financial woes and increased regulatory scrutiny. The company, a major player in Australia’s casino and entertainment industry, confirmed the arrangement in an update to the Australian Securities Exchange (ASX). This move provides much-needed breathing room for The Star, which has faced declining revenues, escalating costs, and regulatory penalties.
Debt facility to ease immediate pressures
The new debt facility is split into two AU$100 million tranches, available until 20 December 2024. It also comes with a waiver from lenders for covenant testing due on 31 December 2023, relieving immediate financial pressure on The Star.
Chair Anne Ward, in the company’s 2024 Annual Report, emphasised the importance of rebuilding trust with stakeholders and regulators, underlining the significance of this financial lifeline in supporting ongoing recovery efforts.
Challenging financial landscape
The Star has been grappling with a steep revenue decline. Its Q1 FY25 financial report revealed an 18 percent year-on-year revenue drop to AU$351m, coupled with a 130 percent fall in EBITDA, resulting in an AU$18m loss. This follows a tough fiscal year, during which statutory EBITDA plummeted by 45 percent.
The company attributed its poor performance to cost-of-living pressures, regulatory requirements, and penalties. A notable setback came in October when The Star Sydney was fined AU$15 million by the New South Wales Independent Casino Commission (NICC) over compliance failings.
Strategic restructuring and Brisbane expansion
As part of its operational overhaul, The Star permanently closed Treasury Brisbane earlier this year to focus on the phased opening of The Star Brisbane. This high-profile project is central to the company’s growth strategy, though financial constraints and regulatory challenges have added to its complexity.
The debt facility will help fund The Star Brisbane’s development and sustain other core operations while addressing regulatory obligations. By stabilising its finances, the company aims to regain stakeholder confidence and drive future growth.
Looking ahead
The Star is now at a critical juncture. Its ability to navigate regulatory challenges, restore operational efficiency, and rebuild trust with stakeholders will determine its long-term success. While the AU$200m debt facility provides temporary relief, the company must deliver on its remediation plans and adapt to an increasingly challenging environment.
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