Star Entertainment loses almost half its market value as losses, woes mount
STAR Entertainment Group stock tumbled as much as 44 per cent as it resumed trading after a long-awaited and confronting financial update showed the unprofitable casino operator needs even more capital and trading conditions are deteriorating.
After almost a month-long suspension, Star’s stock price collapsed early on Friday. The removal of the halt allowed investors to price for the first time the multiple crises that risk overwhelming the Australian company.
The shares traded as low as 25 Australian cents, slicing Star’s market value to around A$750 million (S$663 million).
Since late August, an inquiry has found Star remains unfit to operate its flagship Sydney casino, and the gaming regulator is weighing its response. Star has also been forced to borrow a further A$200 million at 13.5 per cent, a junk-bond rate usually reserved for distressed borrowers.
Then on Thursday, Star reported a A$1.69 billion loss, wrote down the value of all its casinos, and revealed it needs yet more capital to weather a market that’s getting even weaker. The company also increased planned payments into its Brisbane gaming resort joint venture to about A$357 million over the next two years and beyond.
“The list of issues for Star to navigate continues to grow,” Simon Thackray, an analyst at Jefferies (Australia) Pty, said in a report. “At this point in time, we see considerable uncertainty.”
Thackray said the focus should be on Star’s ability to service its debt “given a deteriorating earnings base that is under structural pressure on both revenue and costs.” BLOOMBERG
Share with us your feedback on BT's products and services
