After questions raised by the Australian Securities Exchange (ASX), The Star Entertainment Group Limited has defended its decision to not disclose a AU$1.44 billion ($966 million) non-cash impairment charge prior to its latest financial report.
In a letter issued to The Star on October 15th, the ASX raised several questions, namely whether the announcement of a new debt facility of up to AU$200 million ($134 million) from its corporate lenders, and the material non-cash impairment charge, constituted significant information expected to materially affect its securities’ price and should have been disclosed.
Regarding the AU$200 million ($134 million) debt facility, The Star responded that it first became aware of the agreement on September 25th, 2024, and that it announced the entry into that arrangement on the same date.
‘This announcement was made promptly and without delay after the relevant commitment documentation was executed by The Star’s lenders and The Star. At all times prior to this documentation, there was no certainty that any agreement would be reached,’ The Star company secretary Jennie Yen noted in the response.
As for the anticipated AU$1.44 billion ($966 million) non-cash impairment charge, The Star stated that it did not believe the release of this information would materially affect the price or value of its securities.
In its financial statements for the year ended June 30th, 2023, The Star recorded a non-cash impairment of AU$2.17 billion ($1.46 billion) across its properties in Sydney, Gold Coast, and Brisbane. This impairment was attributed to altered operating conditions, increased casino duty rates, rising discount rates, and declining earnings.
The Star considered that the mentioned AU$1.44 billion non-cash impairment, ‘which did not impact The Star’s underlying cash earnings,’ would not have been a surprise to the market or constituted market-sensitive information. Therefore, it deemed it was not obliged to release that information under ASX rules prior to the results announcements.
This situation arises amid ongoing regulatory challenges for the company; it has faced a AU$15 million ($10 million) fine and has had its license conditions tightened by the New South Wales Independent Casino Commission (NICC).
Despite these penalties, The Star’s casino license remains suspended rather than revoked, with NICC-appointed manager Nick Weeks overseeing operations until at least March 31, 2025.
The Star considered that a further non-cash impairment, ‘which did not impact The Star’s underlying cash earnings’ would not have been a surprise to the market, or otherwise constituted market sensitive information.
Therefore, it considered was not obliged to release that information under ASX rules prior to the release of the results announcements.
This comes in the context of the company’s ongoing regulatory challenges; it has faced a AU$15 million ($10 million) fine and has had its license conditions tightened by the New South Wales Independent Casino Commission (NICC).
