As losses loom and the company steps into the new financial year on shaky ground, Star Entertainment has been able to negotiate an AU$200 million (138.9 million) credit that will be drawn in October and December, in separate tranches.
Star Is Walking a Thin Financial Rope and Aid Is Direly Needed
Creditors have shown a willingness to work with Star Entertainment and offer the company financial relief up to an extent, providing that the operator proves itself capable of navigating the increasingly intricate financial and regulatory problems it faces.
First, it needs to convince creditors that the company is able to provide increased security for lenders, and also clear any regulatory hurdles that could imperil the future operation of the company.
In order to receive the second part of the credit, the company would have to present its long-term strategic plan for recovering from what has become a mounting crisis that has brought Star Entertainment to the breaking point on several occasions already.
The company’s financials are indeed on the rocks. The company is reporting AU$1.69 billion ($1.08 billion) in loss for the financial year that ended on June 30. Star Entertainment cited several big issues with navigating the current leisure and land-based casino sector, with loss of market share and cost-of-living all contributing to subdued spending.
“The Star continues to assess additional avenues to further support its liquidity position, including other potential capital sources such as subordinated debt” the company said, and is hoping to get tax relief from Queensland to patch up its finances.
Star Wants the Government to Help Out, But Performance Bonuses Irk Politicians
Many have criticized supporting the land-based sector, calling the defense mounted by Star Entertainment that jobs would be at risk as unfair to the taxpayers.
Premier Steven Miles has said that the government has shown Star Entertainment the same consideration as any other indebted entity that is struggling to keep their end of the social contract by paying their due tax.
However, the government and the public have criticized Star Entertainment for still awarding performance bonuses to its C-level executives at a time when the company is facing an existential crisis that could see the iconic brand sink under.
Indebted, Star Entertainment may need this new credit more than it realizes. In the meantime, this is not the first time Star has found itself talking about renegotiating debt facilities, as the company has already had multiple talks with creditors, including in early September.
