Star Entertainment shares fall sharply after trading resumes while casino giant seeks financial lifeline

Shares in struggling casino giant Star Entertainment have fallen more than 15 per cent after trading was briefly halted on Friday, as the company looks for a financial lifeline to avoid collapse.

The casino operator halted trading on Friday after failing to post its half-year financial results minutes before the Australian share market opened.

The company, which operates casinos in Brisbane, the Gold Coast and Sydney, is facing severe financial difficulties, and has already warned it is at risk of collapse.

The casino operator was due to post its results before trading resumes on the Australian Securities Exchange at 10am AEDT on Friday.

At 9:54am on Friday, the ASX announced that trading of Star’s shares would be “temporarily halted until further announcement”.

In an update posted to the ASX at 10:31am, the company said it expected to receive “one or more liquidity proposals during the course of today”.

“It is likely that the [half-yearly report] will only be finalised if the Company receives liquidity proposals that … are sufficiently capable of being finalised in terms of determining whether the Company can continue as a going concern,” the statement said.104945240

“If the [half-yearly report] is not lodged in accordance with ASX listing rules later today, the Company’s shares will be automatically suspended from trading from Monday, 3 March 2025.

“There remains uncertainty as to [the company’s] ability to continue as a going concern.”

Star’s shares resumed trading just before midday on Friday, but had fallen more than 15 per cent to just 11 cents by the close of business. On Thursday night, the Australian Financial Review reported that Star’s board was struggling to sign off on accounts that said the company was a going concern.

Casino giant ‘slow-moving train wreck’
Star is facing severe operational challenges, and in January told the ASX it had only $79 million in cash available.

The company is looking for a financial lifeline to avoid collapse, and last week was reported to be considering a $650 million debt refinancing offer from Oaktree Capital Management.

“If they don’t get a lifeline, eventually they will have to enter some kind of voluntary administration process,” said Omkar Joshi,

an analyst at Opal Capital Management. “At that point, you will probably have a scenario where the assets are sold, they are liquidated. There are still good quality assets there, if someone is starting with a clean slate, there is an opportunity for them to grow from there.” Mr Joshi said a series of poor management decisions over a long period of time had contributed to Star’s financial troubles. “It has been a slow-moving train wreck, and we have seen this go on for a number of years,” he said. “It has been gradually getting worse. A number of different management teams have gone through this over the last couple of years, and now it’s to the point where they have lost confidence in being able to raise new equity.

“They can’t really raise new equity funds, they are struggling to raise new debt funds as well, and when you have a cash flow shortfall, it’s really creating liquidity problems.”

‘Level of anxiety and frustration is growing’ for staff
The looming prospect of the Star entering administration is an added uncertainty for staff at the casino, which employs about 9,000 workers across its three locations.

“Clearly the Star’s financial position is very poor, and our concern is that the company goes into administration,” said Andrew Jones, of the United Workers Union.

“There are two options here. One, where the administrator closes the doors and, effectively, our members become unemployed,” he said.

“Or, alternatively, the administrator is able to continue to operate the casino while they look for someone else to buy it.

With the casino’s future hanging in the balance for months, Mr Jones said it was taking a toll on Star staff.

“Level of anxiety and frustration is growing amongst staff at the Star,” he said.

“Basically, the Star employees have been in this position since September, although these issues go back two to three years with the company.

“So that level of uncertainty, employees have been dealing with for a long time.

“If the company goes into administration, we would expect state governments to move quickly to work with that administrator to keep the doors open and protect those jobs.”

Speaking in Brisbane on Friday morning, Queensland Premier David Crisafulli said his government was focused on protecting Star’s employees.

“The loans that are owed must be repaid and we’re happy to talk about the future, whoever can run that business, happy to talk about the opportunities to grow and thrive in Queensland,” he said.

“But our non-negotiable terms are about the people who work there.”

In Sydney, NSW minister Penny Sharp said the state government was “closely” monitoring developments with the company.

“The Star has to maintain itself as a viable casino, that’s something they have to do,” he said. “We’ve obviously been working with them for a long time on a number of issues, including the importance of the jobs that are there, and we’ll continue to do that.” In January, NSW Premier Chris Minns said his government had met with the Star a year ago to work on a rescue package for the company but that they “don’t have the money for the casino”.

‘Lots of deals’ to prevent collapse
The financial crisis for Star Entertainment came after 11 former directors and executive officers of the company were sued by ASIC in the Federal Court.

The corporate watchdog alleges the Star’s leadership team breached its duties under the Corporations Act by failing to address money laundering risks and criminal organisations at its casinos between 2017 and 2019.

ASIC has since settled with two former Star executives, former chief financial officer Harry Theodore and former chief casino officer Greg Hawkins.

Analysts had previously suggested there was a 50 per cent chance of the Star collapsing and investors “could get out” stranded.

Morningstar analyst Angus Hewitt said in January, “We think the Star is very unlikely to get through this difficult period.”

Before the Star’s trading halt, billionaire hotelier Bruce Mathieson – who owns an estimated 9 per cent of the casino giant’s shares and has reportedly tried to buy the company twice – believes it can be saved by making management changes.

“I wouldn’t want it to be put into liquidation… for the sake of the people,” he told ABC Radio Brisbane.

“I’m pretty sure there are a lot of deals that can be done to prevent it from doing that.

“I don’t think they personally know how to handle it.” At the close of trading on Thursday, Star’s share price was just 13 cents, with a market capitalisation of about $373 million.