Australia’s Star Entertainment has confirmed a comprehensive refinancing and capital restructure initiative, in addition to dismissing the possibility of further asset sales.
The embattled casino operator, one of three that has faced an array of regulatory hurdles, is raising A$750m. This will comprise A$589m via a 1 for 1.65 pro rata accelerated non-renounceable share offer and a A$161m institutional placement.
In addition, the company has also confirmed A$450m of new debt facilities provided by Barclays and Westpac, which is made up of a A$150m four-year revolving credit facility and A$300m four-year underwritten term loan.
As a result, Star will have all existing debt repaid and cancelled, no debt maturities until the second half of 2027, a “more flexible covenant package” to support ongoing operations and funding requirements and retain its current operations.
Earlier in the week, Star requested that a trading halt be applied to its ordinary shares as the group put the finishing touches to these capital restructure initiatives.
“Today’s announcement is a key milestone in the renewal of The Star,” noted Robbie Cooke, Group Chief Executive Officer and Managing Director.
“With an optimised capital structure, strengthened balance sheet and enhanced flexibility, we have a strong platform from which to deliver on our renewal program and strategic priorities.”
The company also issued a trading update for July and August, with operating conditions having stabilised and FY24 year-to-date revenue said to be “broadly consistent with the end of FY23”.
Total domestic revenue through the two months came in at A$143.5m (2022: A$138.3m), with earnings closing the period at A$21m (2022: A$19.9m).
In September 2021, the then Independent Liquor and Gaming Authority, now the NSW Independent Casino Commission, appointed Adam Bell SC to conduct a review of The Star.
The main goal was to assess its suitability to hold and be associated with a casino licence in the region, including compliance with its regulatory and legal obligations.
In September 2022, an unsuitability verdict was issued, with “many governance, risk management and cultural failings” reported as being discovered, with Star also found to have treated the state regulator “with disdain” and having delivered “deceptive” communications in the past.
This was followed by a similar ruling some time later within the group’s home market of Queensland, with Star subsequently hit with a pair of A$100m penalty packages as well as a number of remediation orders.
Further regulatory issues have seen the operator become subject of enforcement action from Australia’s financial watchdog AUSTRAC, and counting four class action lawsuits being levelled against the group.
Last month, Star revealed that it had swung to a huge A$2.43bn statutory net loss for the 12 months ending June 30, 2023, as the numerous challenges encountered across recent times continue to take their toll on the company.
This figure includes A$2.82bn of significant items that comprise a non-cash impairment of The Star Sydney, The Star Gold Coast and Treasury (A$2.17bn), debt restructuring costs (A$54m) and redundancy costs (A$16m).
Furthermore, A$593m in ongoing regulatory and legal costs includes NICC and OLGR fines, AUSTRAC civil proceedings, unpaid NSW casino duty and costs associated with ongoing regulatory reviews.
