The future of The Star Entertainment Group has been plunged into further uncertainty amid an ongoing dispute between the casino operator and its lenders.
According to a report by the Australian Financial Review, the group is facing a further obstacle in emerging from its financial turbulence, with lenders behind the Star’s AUD $430m (£206.9m) loan refusing to sign the covenant waivers that would allow the group to finalise its full-year accounts.
The Star has since confirmed that the lender group has proposed various terms in exchange for signing the required covenant waivers, however, The Star deemed them “unacceptable”.
Although the lender group has previously signed the waivers, often for no fee, it is reported that the group has rejected a small fee offered by The Star.
Instead, they want as much as AU$20m, which represents 5% of the value of the loan, or added security over The Star’s assets.
The Star has said that it plans to lodge unaudited accounts with the ASX on 29 August, and audited accounts by 30 September.
If no agreement is reached, The Star will be forced to refinance its debt for a third time in two years.
Chasing funds
The embattled casino operator has spent the last two years chasing funds as it seeks to find a path to financial recovery.
Earlier this year, The Star secured a combined AUD $300m investment from Bally’s Corporation and Investment Holdings – which Chair Anne Ward hailed as assisting The Star’s ability to continue “as a going concern”.
More recently, The Star navigated its exit from the consortium related to its Queen’s Wharf Brisbane project, freeing itself from significant financial obligations.
With its exit, the operator will no longer be required to fund any equity contributions, which were set at $212m, and be released from its parent company guarantee concerning its debt facility share – a debt obligation that was $1.4bn.
iGaming Expert Insight: This latest development will be seen as a setback for the embattled casino operator, after it was granted relief earlier in the year in the form of an agreement for the exiting of its 50% stake in the Destination Brisbane Consortium (DBC). Before the current situation escalates, it’s hard to imagine Star won’t be acting with urgency to resolve the most recent chapter in its story as it eyes stability.
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