It may have sold the family jewels and lost the shirt off its virtual back to stave off going bust, but struggling casinos group Star Entertainment is not out of financial trouble yet.
Star announced on Friday it had sold its half stake in the new Brisbane casino and entertainment complex, and secured a short term loan to buy time to refinance its debt but it still may run out of cash before administrators are called in.
Star told the Australian Securities Exchange (ASX) it had agreed to sell 50% of Destination Brisbane Consortium (DBC), which owns the Star Brisbane resort, to its joint venture partners Chow Tai Fook Enterprises and Far East Consortium International.
The company said in the ASX announcement it had also agreed to terminate the DBC Casino Management Agreement, and buy its partners’ respective 33.3% interests in the Dorsett and Andaz Hotel towers at The Star Gold Coast, giving it full ownership.
The sale meant it avoided contributing at least A$212 million (US$133.6 million) more equity to DBC after 31 March 2025.
Star said in a separate ASX announcement it signed a financing commitment letter for a $250 million senior secured bridge facility with King Street Capital Management, to provide more cash while it seeks liquidity for a long-term refinancing of senior debt.
Separately, it had entered into an exclusivity and process deed relating to a refinancing proposal, which could provide total debt capacity of up to $940 million.
Cash needed now
But the key element in the announcement that indicated it was not out of trouble was: “(Star) is also pursuing various short-term liquidity initiatives as neither the bridge facility proceeds nor the refinancing proposal will be available to address the Company’s immediate liquidity requirements.”
Star’s precarious position was reinforced by an Australian Financial Review report that its shares would remain suspended, because its directors could not sign the accounts due to continuing doubts about its ability to meet short term liabilities.
The company had just A$79 million cash at 31 December after burning through $107 million in three months.
Star said its Hong Kong-based partners had paid $35 million on Friday and would pay $10 million before the end of March, and $8 million on the earlier of the Andaz Hotel practical completion or 30 November 2025.
Star CEO and Managing Director Steve McCann said the sale of the 50% interest in Star Brisbane was a significant milestone for the company. It contributed to providing a potential pathway towards financial viability.
“This transaction is a step in the right direction for The Star. There are still a number of challenges that we need to address, including progressing short and long-term liquidity for the Company,” McCann said in an ASX announcement.
He said the sale, funding initiatives and Gold Coast expansion improved Star’s “capacity to have a viable future”, but it faced risks including funding, restoration of licences, resolution of litigation, lower revenue and negative cashflow and stakeholder support.
