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The Star Entertainment Group intends to raise up to A$1.2bn through a blend of equity and debt measures to address existing debt concerns and enhance its financial position.

The beleaguered Australian casino operator has launched a A$750m equity fundraising initiative, offering shares at A$0.60 each through investment bank Barrenjoey Markets Pty. 

This initiative comprises a 1-for-1.65 entitlement offer targeting existing retail shareholders, expected to generate around A$589m, along with a placement of shares valued at approximately A$161m, primarily aimed at institutional investors.

Simultaneously, the company has unveiled a comprehensive four-year debt package totalling A$450m, underwritten by Barclays Bank PLC and Westpac Banking Corporation. 

This package includes a A$150m revolving credit facility and a A$300m underwritten term loan.

Addressing financial challenges

The casino operator said its existing “debt structure is no longer fit for purpose” and it has explored various funding and asset sale alternatives. 

The selected refinancing and capital initiatives aim to extend debt maturity, improve liquidity and provide the company with greater flexibility to navigate “a range of operational and regulatory uncertainties”.

Group CEO and MD Robbie Cooke said: “Today’s announcement is a key milestone in the renewal of The Star. 

“With an optimised capital structure, strengthened balance sheet and enhanced flexibility, we have a strong platform from which to deliver on our renewal programme and strategic priorities.”

Regulatory woes

Star Entertainment has faced several regulatory challenges in recent years, including compliance shortcomings at its Sydney casino. 

The New South Wales Independent Casino Commission imposed an indefinite suspension and a A$100m fine

Ongoing investigations and civil penalty proceedings have added to the company’s regulatory woes.

In addition, a securities class action has been filed against The Star in the Supreme Court of Victoria, raising concerns about the adequacy of existing insurance.

The raise is expected to secure cash for future penalties with cases against the casino still pending.

Back in February, the company had already obtained A$800m using a comparable equity fundraising approach, which included a A$685m rights offering and an A$115m institutional placement.

Furthermore, despite the company’s efforts to cut costs by A$100m and reduce its workforce by 500 jobs, a substantial turnaround in its financial situation has so far remained elusive.

Stock performance

Over the past six months, the group’s share price has seen a significant decline of 58%, with a nearly 70% decrease over 12 months. 

The company has temporarily suspended the trading of its shares until 27 September.

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