Two of Australia’s largest casino operators have announced pay cuts for senior executives and most of their staff have now been stood down, amid the pause to gaming operations in that country.
Casinos in Australia were ordered to close temporarily from March 23 as part of efforts to slow the spread of the Covid-19 disease in that nation. The move followed the decision by Australian authorities to put in place “more widespread restrictions” regarding social gatherings. These include the closure of casinos, bars and other entertainment venues.
On Thursday, Crown Resorts Ltd and The Star Entertainment Group Ltd each issued a filing to the Australian Securities Exchange, updating the market on their respective strategies to weather the shutdowns of their businesses due to the coronavirus pandemic.
Crown Resorts said it had been “forced to substantially reduce its workforce through a series of stand downs”, a process that it said was “now substantially complete”. The company said it had “progressively stood down”, on either a full or partial basis, “approximately 95 percent or over” of the group’s 11,500 employees. “Only employees in business-critical functions remain actively working,” stated the firm.
Crown Resorts runs a gaming complex (pictured) in Melbourne, Victoria; one in Perth, Western Australia; and is developing a third at Barangaroo in Sydney, New South Wales. Casino investor Melco Resorts and Entertainment Ltd, a company controlled by gaming entrepreneur Lawrence Ho Yau Lung, has a 10-percent stake in the Australian firm.
The Australian operator said it had provided an “ex gratia payment” of two weeks’ to staff that have been stood down, other than senior management.
Crown Resorts’ chief executive and certain other senior executives, have taken a 20 percent reduction in fixed remuneration until June 30, 2020, according to the filing. The same measure was also applied to the group’s chairman and non-executive directors.
Monthly costs
The company said that while its gaming and other non-essential business activities remain suspended, the group expects the staff-related measures it has taken will help reduce its underlying operating cash costs to between AUD20 million (US$12.6 million) and AUD30 million per month.
Crown Resorts also said it was able to secure over AUD1 billion in additional debt facilities, including funds to “support the continuation of the construction of Crown Sydney”.
“Crown intends to continue construction of the Crown Sydney project as planned,” and in the absence of “any further delays arising from the impact of Covid-19, remains on track for completion of the Crown Sydney Hotel Resort by the end of the year,” stated the company.
Fitch Ratings Inc said in a report earlier this month that Crown Resorts had enough “headroom to absorb the effect of the government shutdown of casinos” in Australia.
In its own Thursday filing, market rival The Star said the gaming pause in Australia would “continue to have a material impact” on the firm’s business.
The Star Entertainment runs The Star Sydney in New South Wales; it also runs The Star Gold Coast and Treasury Brisbane, both in the state of Queensland.
The company had said previously that it had stood down circa 8,500 employees, representing more than 90 percent of the group’s workforce. It added that for the remainder of fiscal-year 2020, non-executive director fees have been reduced by 50 percent, with the CEO’s salary reduced by 40 percent in the same period.
“Other senior executives have also agreed to reductions,” said the company. “These reductions will remain under review depending on the period of shutdown,” it added.
From April 2020 until the restrictions start to lift, The Star’s monthly operating expenses are estimated to be about AUD10 million, according to the filing. These comprise payments to employees who are not stood down, asset security, technology and other fixed costs, it added.
The Star said also it was able to secure AUD200 million in an additional debt facility, as well as an agreement from all its debt providers for “a full waiver of its gearing and interest cover covenants” at the next covenant testing date of June 30, 2020. The company said additionally that it would reduce capital expenditure for this and the next fiscal year.
