23 April 2023
The Star Entertainment Group Announces Sale Of Property And Debt Refinancing To Improve Financial Position
The Star Entertainment Group, a troubled Australian casino operator, has announced new cost and restructuring initiatives in response to the “significant and rapid deterioration” in operating conditions. The business cites the impact of regulatory operating conditions and exclusions, along with a “weakness” in consumer spending as contributing factors. In addition, the company’s Sydney casino has been struggling since the termination of its junket affiliations, which had been the subject of controversy during recent parliamentary inquiries. As a result, the group’s earnings performance is at unprecedented low levels, and the underlying EBITDA for FY23 is expected to decline by up to 32.3%.
To combat these pressures, the company plans to reduce 500 full-time equivalent positions and cancel all incentive programmes, in addition to implementing a salary freeze for non-union employees. These initiatives, along with previously announced operational initiatives, are expected to deliver an annualised reduction in operating expenditure of over $100m compared to FY23. The company is also progressing with the sale of its Sheraton Grand Mirage Resort Gold Coast property and plans to refinance its existing debt funding arrangements to improve its liquidity position.
Despite these measures, the business warns that its earnings estimate does not include the expected costs related to regulatory pressures. The company will continue to work with regulators to remediate its businesses and support a return to suitability over time.