Star Entertainment Raises $800mln in Financing
Author:
Scott Lawson
Australian casino company Star Entertainment has closed an $800mln financing round to fuel their future growth plans and shore up capital going into an uncertain future. After eating huge losses for the past year amounting to $1.3bln, the casino has managed to convince investors that they are still able to generate a return on capital – and require a fresh injection of cash to make this a reality.
Australian casino company Star Entertainment has closed an $800mln financing round to fuel their future growth plans and shore up capital going into an uncertain future.
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Star Entertainment still holds a special position in Australia as one of the country’s most recognized casino businesses. The main focus is their casino and entertainment company based in Australia. The company operates several casinos in the country, including The Star Sydney, The Star Gold Coast, and Treasury Casino & Hotel in Brisbane.
The Star Sydney is located in the heart of the city and offers a wide range of gaming options, including table games, electronic gaming machines, and a dedicated poker room. It’s in these casino floors that the business strength is exhibited the most. Whilst the casino also features a variety of dining and entertainment options, including restaurants, bars, and live performances, it’s main bulk of revenue comes from international gamblers engaging with classical casino games.
The Star Gold Coast, located in Queensland, offers similar gaming options as well as a range of accommodation and entertainment options, including a theatre, nightclub, and a variety of restaurants and bars. Treasury Casino & Hotel, located in Brisbane, is housed in a historic building and offers a range of gaming options as well as hotel accommodations, restaurants, and bars. Star Entertainment is a major player in the Australian casino and entertainment industry, offering a range of gaming, dining, and entertainment options to visitors.
Tumultuous Times Ahead for Star Entertainment
Star Entertainment has recently raised $800 million in fresh equity from a rights issue and a placement. The equity recapitalization was underwritten by Barrenjoey and Macquarie Capital at $1.20 per share, a 21.1 per cent discount to its last trading price. The deal also secured cornerstone support from Star’s big shareholders and sub-underwriters.
The group was able to convince its core investors that the company still can make use of the resources to generate profits. The question that remains is can they make differential returns compared to the average level being pulled in from the rest of the casino industry. Star is embattled in a number of regulatory disputes ranging from allowing underage gambling on premises, to the facilitation of money laundering in the casino. Heavy fines have been inflicted on the business as a result.
The capital raising was aimed at strengthening Star’s balance sheet after having to pay $100 million fines in both NSW and Queensland for its failures to prevent money laundering and other illegal activities at its casinos. The group also took a $988 million impairment charge on its Sydney casino license due to the uncertainty over its future operations.
Regulatory and Legal Battles Looming
Star Entertainment faces a series of legal problems over the mismanagement of its core business. The company is being investigated by AUSTRAC, the Australian Financial Crime Regulator, over alleged breaches of counterterrorism and anti-money laundering laws. On top of this, the company is also dealing with a revolt from its own shareholders who claim they have been misled on the severity of the firm’s regulatory issues and financial performance.
On the question of their license, the group have been found to be unworthy of upholding the stringent conditions associated with the license. Star has been exposed multiple times of have lax oversight of the governance protocols required by law. One damning report from KPMG appears to have been the nail in the coffin here, as the Star Entertainment group were found to not disclosed money laundering risks to the regulators.
As it stands the financial situation of Star Entertainment is quite precarious. The group have already shouldered some $100 million in fines, and there is a $988 million impairment charge levied against the Sydney real estate whilst they wait to shore up their finances.
