Lenders to Star Entertainment
(ASX:SGR) have reportedly offered an additional $150 million to help the struggling casino group survive a cash crunch caused by cost blowouts at its new Brisbane casino and the ongoing weakness in patronage at its gambling operations in Sydney, Brisbane, and the Gold Coast.
Media reports last night stated that the offer from the company’s banks came after Star informed the ASX that it still could not finalise its 2023-24 annual accounts and report.
As a result, it remains suspended.
In a statement on Wednesday afternoon, Star said it "is not yet in a position to finalise" its preliminary report for the year ended 30 June.
In a market update filed just before 5 pm on Wednesday, the company stated it continues to work with stakeholders to finalise the accounts but cannot specify when that might happen.
Star mentioned it "is continuing to work with various stakeholders and advisers in respect of its financial position. These discussions are ongoing and involve, among others, state governments, regulators, and the company's lenders."
"As these discussions are ongoing, The Star is not yet in a position to finalise its preliminary financial report for the financial year ended 30 June 2024 (FY24)."
"The Star will provide a further update in relation to these matters when it is able to do so."
"The company's shares will remain subject to the current suspension until the FY24 preliminary financial report has been released to the ASX.”
The shares last traded at 45 cents, giving the company a market cap of $1.29 billion, which seems significantly overvalued. It sold a property in Brisbane a week ago for approximately $67 million, but that has been the only significant update since its suspension last week.
Regardless of the offer of additional cash, Star and its auditors still need to agree on the accounts, particularly regarding balance sheet values for assets like the over-budget casino and hotel complex in Brisbane and any impairments.
Before Star's suspension last week, market reports suggested it was seeking $300 million in new capital, possibly via some sort of convertible note. This would be used to cover trading losses in the first few months of the new casino and other businesses at the Queen’s Wharf facility.
The $150 million, combined with the $67 million from the property sale and cash on hand, may be enough to sustain the company through the next six months of trading in Brisbane.