The interest rate on the loans was set at an onerous 13.5 per cent. The two $100 million tranches are also secured over company assets. The second tranche is conditional on Star raising $150 million from investors this year.
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Star may need $400 million in funding from other sources on top of the $300 million it expects to raise from planned asset sales, analysts at Jefferies say.
“Given gearing levels, Star may be forced to contemplate significant strategic decisions such as a divestment of Queen’s Wharf Brisbane equity or other key assets, which we expect would come with their own regulatory hurdles,” analyst Kai Erman said.
Last week, the NSW casino regulator handed Star’s flagship Sydney casino a significant reprieve when it extended the suspension of the casino’s licence despite the business remaining unfit to hold it.
The NSW Independent Casino Commission handed Star a $15 million fine and extended its licence suspension into next year. Chairman Philip Crawford said there was “no coming back if you take the licence away”.
Star shares closed at 27c on Friday, valuing the casino operator at just $832 million.
Privately owned Crown Resorts released its financial results on Friday evening, with losses that reflect the financial challenges that Star is facing.
Total revenue dropped 4.4 per cent to $1.43 billion while net losses improved to $164.8 million from $199.4 million the prior year.
Crown has been found suitable to retain its casino licences in NSW and Victoria and has completed more than $200 million in remediation work needed to meet compliance obligations. It is also shoring up its balance sheet with the sale of non-core assets such as its stake in the Nobu restaurant chain, part-owned by Hollywood star Robert De Niro, for $US180 million ($268 million).
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It has also sold the One Queensbridge site in Melbourne for $85 million. It had been earmarked for a hotel and apartment complex. Crown is also selling its remaining private jet.
Both casinos are suffering due to the foreign, predominantly Chinese, tourists not gambling in the numbers expected thanks to the pandemic, and a slowing economy in China.
International tourism arrivals remained 80 per cent below pre-COVID levels for the 2024 financial year.
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