Australian casino operator The Star Entertainment Group Ltd says it “continues to work towards the fulfilment of conditions” in order to draw down an additional AUD100 million (US$62.1 million) under the second tranche of a new loan facility.
“A number of these conditions remain challenging to meet given the group’s current circumstances,” stated the firm in a Monday filing.
“In particular, the group’s capacity to raise AUD150 million of subordinated debt is limited in the short term in the absence of additional liquidity solutions,” it added.
Star Entertainment runs its flagship The Star Sydney casino (pictured) in the Australian state of New South Wales.
It also holds gaming licences in the state of Queensland, where it launched in late August The Star Brisbane, a new casino resort that is part of the AUD3.6-billion Queen’s Wharf Brisbane.
The group stated it “continues to … explore other possible liquidity solutions”.
Star Entertainment said: “While discussions continue with respect to a range of different solutions, there is no certainty that any of these negotiations will result in one or more definitive arrangements that might materially increase the group’s liquidity position.”
It added: “In the absence of one or more of those arrangements, there remains material uncertainty as to the group’s ability to continue as a going concern.”
Star Entertainment stated that its available cash as of December 31 last year stood at AUD78 million.
In September, the casino firm started a “cost out programme” targeting at least AUD100 million of initial annualised costs savings, with implementation targeted to be completed by March this year.
“The group currently anticipates that the target will be achieved,” it stated.
Star Entertainment reported lower revenue in the three months to December 31, the firm’s financial second quarter. Such revenue stood at AUD299 million, compared to AUD351 million in the preceding quarter.
The company reported negative earnings before interest, taxation, depreciation and amortisation (EBITDA) to the tune of AUD8 million, compared to an EBITDA loss of AUD18 million in the preceding three months. The firm posted positive EBITDA of AUD51 million a year ago.
Star Entertainment reported an 18-percent decline quarter-on-quarter in its operating expenses to AUD52 million, citing lower corporate costs, among others.
“The results for the period reflect continued weakness in the operating performance of the group due to the ongoing challenging consumer environment, the impact of mandatory carded play and cash limits in New South Wales, and costs associated with ongoing remediation activities,” the company said in its Monday filing.
In October, authorities in New South Wales said the casino licence for The Star Sydney property would remain suspended, with the casino operating under supervision. The company was also hit with a AUD15-million fine for ongoing compliance problems, and informed there would be a fresh review of its progress within the first quarter next year.
