Star Entertainment Faces Severe Cash Crisis as Shares Hit Record Low
Star Entertainment Group faces severe liquidity challenges as cash reserves dwindle to AUD 79 million by end of 2024, down from AUD 107 million in Q3. The Australian casino operator's shares hit historic lows amid growing concerns from lenders.
Star Gold Coast casino at night
Morningstar analyst Angus Hewitt warns the company may not survive until its February 28, 2025 interim results without immediate financial intervention. Star struggles to meet conditions for accessing a crucial second AUD 100 million debt tranche, which requires securing additional subordinated capital of at least AUD 150 million.
The company's challenges stem from ongoing anti-money laundering investigations, resulting in government oversight of its three major venues - The Star Sydney, The Star Brisbane, and the Star Gold Coast. JPMorgan Chase's recent liquidation of its 5.47% voting stock stake further compounds the company's troubles.
Recovery options appear limited:
- Asset sales or finding a potential buyer
- Equity raising at a significant discount
- Seeking immediate financial solutions
Hewitt maintains an "extreme uncertainty" rating with a price target of AUD 0.20, estimating a 50% chance of the company entering administration. The combination of weak carded play, challenging economic conditions, and limited access to additional funding creates a precarious situation for Star Entertainment's future.
Expected next steps include a potential equity raise of AUD 150 million at AUD 0.10 per share, representing a 30% discount to current trading prices, though this may further pressure the already struggling stock price.