Given the colossal amount of deliberation surrounding the fate of embattled Star Entertainment Group (ASX: SGR), the subject of boardroom talks over the weekend was most likely less focused on the casino operator’s imminent collapse, but how it would be announced.
Having failed to sign off on its December 31 financial accounts the stock was placed on a trading halt today.
"It is likely that the [half-yearly report] will only be able to be finalised if the company has received liquidity proposals which … are sufficiently capable of being progressed to finalisation in the context of determining whether the company can continue as a going concern," Star said in a statement to the ASX on Friday.
In light of this statement, Star’s share price ended trading on Friday 15% lower at 11 cents a share. This puts the value of the one-time $5 billion company at $315 million.
Failure by the company and its CEO, Steve McCann, to secure funding from lenders and a potential new financier has only raised the speculation that without a lifeline from the state of the federal government, Star has simply run out of time.
While Queensland Industrial Relations minister Jarrod Bleijie has reiterated the government’s commitment to protecting Star's 9000 employees' jobs, this commitment does not extend to any financial bailout.
Given that board discussions are ongoing, Star is unlikely to announce today. However, an announcement tomorrow may confirm that the company is entering voluntary administration.
This outcome would remove the board and management from the day-to-day running of the business, resulting in the immediate sacking of staff and its assets being liquidated.
While Star owns casinos in Sydney and the Gold Coast, the jewel in its crown is the recently opened Queen’s Wharf operation on the banks of the Brisbane River. To help free up badly needed working capital the group has been offloading non-core assets for some time.
Star is understood to have told its lenders on Friday that it had one week of cash left and has sought regulatory clearance for an administrator to take control should it be required.
Star’s fortunes started to unravel four years ago in 2021. This is when a NSW government inquiry found its board and executives had turned a blind eye to obvious anti-money laundering and counter-terrorism risks.
It’s also understood that the costs associated with the opening of the Queen’s Wharf precinct in Brisbane put considerable pressure on the company’s finances.
The group has also guaranteed 50% of the Queen’s Wharf venture’s $1.6 billion debt pile, which is due to be refinanced later this year. It owns that precinct with Chow Tai Fook Enterprises and Far East Consortium, both investors in the broader group.
Its lenders, who owe about $430 million and have security over its assets, have rejected McCann’s requests for more funds for months.
While proceedings are still ongoing against nine other Star officers and directors, two former Star Entertainment Group directors received penalties in Federal Court last week.
The group’s former chief casino officer Gregory Hawkins was ordered to pay a $180,000 penalty and disqualified from managing corporations for 18 months.
Former chief financial officer Harry Theodore was ordered to pay a $60,000 penalty and disqualified from managing corporations for nine months.
