Struggling Star Entertainment’s Sydney property fire sale in desperate cash grab to avoid collapse

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Struggling Star Entertainment’s Sydney property fire ***** in desperate cash grab to avoid collapse

Star Entertainment has sold off a key asset as it struggles to find the cash needed to engineer a recovery from a financial bloodbath that has left the casino operator on the edge of collapse.

The embattled company on Wednesday revealed it would bank $60 million through the divestment of its Sydney event centre and other spaces within the flagship Star Sydney complex to Foundation Theatres.

Star chief executive Steve McCann said the company had worked closely with Foundation Theatres since it acquired the sublease for the Sydney Lyric — also part of the Star complex — in 2011.

“We are pleased to partner with them as part of the continued evolution of our broad entertainment offerings at The Star Sydney,” Mr McCann said.

“We continue to work on a number of other potential non-core asset transactions.”

Emphasising the casino operator’s dire cash position, Foundation Theatres will pay the $60m by Friday, with the deal due to close by the end of February.

The transaction comes just a week after Star — which also has casinos in Brisbane and the Gold Coast — warned it was on a financial precipice while reporting a disastrous trading update to the *********** Securities Exchange.

In announcing a 15 per cent slump in revenues and an $8m loss for the second quarter, Star declared it was struggling to find the necessary capital to obtain the second tranche of a vital $100m bailout loan.

Attempts to find other financial solutions had so far failed to eventuate, Star said in the update.

“There is no certainty that any of these negotiations will result in one or more definitive arrangements that might materially increase the group’s liquidity position,” the company statement said.

“In the absence of one or more of those arrangements, there remains material uncertainty as to the group’s ability to continue as a going concern.”

Star’s directors have sought “safe harbour” protection under the Corporations Act to indemnify them from personal liability should the company go insolvent while it continues to trade on the ASX.

Star’s hopes are increasingly for a government handout from the NSW or Queensland governments, but NSW Premier Chris Minns ruled out intervention.

Star’s quarterly activities report showed a parlous financial state, with revenues cratering across its casinos.

Revenues were down $50m in the last quarter alone as mandatory limits and cashless gambling rules were introduced.

Compared to the same time last year, revenues were down by 32 per cent, dropping from $438m to $299m. Earnings had also been affected by the ***** of its Treasury Brisbane casino to Griffith University as it raised much-needed funds.

Earnings before interest tax, depreciation and amortisation plunged by nearly $60m compared to a year ago, with the company posting an $8m loss for the quarter to December 31. That left it with just $78m in the bank at the end of December.

Facing regulatory hurdles and fines linked to a series of scandals involving the concealment of criminally-linked junket operators, operation of a secret gambling room, and regulatory breaches that saw it almost lose its NSW licence, the company has been bleeding cash amid a collapse in high-roller revenue and a reduction in takings from its gaming floor.

The company is also strained by debt repayments for its costly multibillion-dollar development of Queen’s Wharf Brisbane casino precinct.

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