Australia’s The Star Entertainment Group may face voluntary administration within months, as lenders doubt the company’s ability to secure a lifeline investor, according to the Australian Financial Review.
With its market value plummeting from AU$4 billion ($2.6 billion) to under AU$500 million ($325 million), the casino operator has struggled with cash flow and regulatory challenges.
In a recent filing with the Australian Securities Exchange (ASX), the company informs that its available cash fell by AU$79 million ($49.16 million) from its last report at end-September 2024.
According to the AFR, the company has burned through AU$107 million ($69.5 million) in recent months, and lenders are considering a AU$100 million ($64.5 million) lifeline, contingent on Star raising an additional AU$150 million ($96.7 million).
Meanwhile, the company is exploring asset sales and other liquidity solutions. Casino revenues and overall earnings have sharply declined, exacerbated by stricter regulations and increased investment in its new Brisbane venue.
Citing two sources inside Star, the AFR indicated that the company’s secured debt providers said it was unlikely to find an investor in its current form, which would mean it runs out of cash based on how it is tracking financially, and leave the board with no option but to cede control of the company.
If Star enters voluntary administration, it could lead to significant losses for shareholders, including billionaire Bruce Mathieson, whose 9.6 percent stake has lost substantial value.
Despite the precarious situation, Mathieson has structured his investments to avoid immediate liquidity issues. The company’s future remains uncertain, with no state-led rescue plan currently on the table.
There is still the possibility that Australia’s casino regulators and the NSW and Queensland governments identify a scenario where the group, which employs 9,000 people, participates in a state-led rescue, but with no such arrangement proposed so far.
The Star’s financial woes became particularly apparent around the opening of its new Queen’s Wharf Brisbane property, which was developed alongside Chow Tai Fook and Far East Consortium – Hong Kong-listed entities who, collectively, are 50 percent joint venture partners in the project.