Star Entertainment to raise stake amid operational and regulatory challenges

mike cherney

SYDNEY – Australian casino operator Star Entertainment Group Ltd. has announced a substantial equity raise to provide it with a financial cushion as it navigates operational and regulatory challenges.
Star said it would raise A$800 million (US$545 million) in equity, comprising a non-renounceable rights issue of A$685 million and an institutional placement of A$115 million.
It also said it has secured covenant relief from bank lenders and noteholders until June 2025.
“These capital structure moves provide greater financial flexibility to meet capital requirements as we prepare for a range of operational and regulatory uncertainties,” Star said in a statement, adding that proceeds from the equity financing will be used to to repay debt and increase liquidity.”
The company faces a host of challenges, including regulators finding it unfit to operate its casinos, New South Wales’ proposal to raise casino tariffs and new competition from rival Crown Resorts Ltd.’s Sydney-operated casinos.
Star added that the dividend payout would be suspended until it reached its long-term target leverage range and Australian regulators determined it was back fit to operate a casino, with its casino license in full force.
Earlier on Thursday, Star reported a hefty half-year loss due to impairment charges related to its Sydney casino. Despite Sydney’s problems, Star said its Queensland properties were performing strongly.
“Our priority is to regain the trust and confidence of our community and demonstrate to our regulators that we are fit to hold our casino licence,” chief executive Robbie Cook said.
Write to Mike Cherney: mike.cherney@wsj.com