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The Star Entertainment Group (ASX: SGR) has responded to media speculation about its financial position, declaring that it is considering safe harbour provisions of corporation law as it continues to finalise its overdue earnings report for FY24.
The announcement is an admission that the group is working on a potential restructure after taking a king hit from the NSW Independent Casino Commission (NICC) at the end of last week with the release of the findings of the second Bell inquiry into its suitability to hold a casino licence.
The Star, which had its shares suspended on Monday by the ASX after the company’s failure to release its financial results by Friday August 30, has been in a state of turmoil since the NICC released the Bell report on the same day that the group’s results were due.
The company’s shares were initially placed in a trading halt last Friday after the NSW casino regulator announced it was considering the “next steps for the future of the suspended casino operator”.
Since then, media speculation about The Star’s liquidity position has been rife, with rumours prompting talk of a potential break up of the company and a sell-off of assets to ensure its survival.
Queensland Premier Steven Miles even confirmed this week that the state government has been locked in talks with The Star to shore up its future, adding that it was considering providing tax breaks for the company in light of The Star’s significant investment in Brisbane’s CBD, namely the $3.6 billion Queen’s Wharf development which recently opened for business.
The Star will have to refinance more than $1 billion in debt before the end of next year for Queen's Wharf, which has been developed in partnership with Hong Kong’s Chow Tai Fook Enterprises and Far Eastern Consortium, each of which hold a 25 per cent stake in the project.
The market is expecting a near-term capital raising will be needed by the group to provide sufficient cash to continue operations.
“The Star is currently reviewing its financial and liquidity position with various advisers in the context of seeking to finalise its preliminary financial report for the financial year ended 30 June 2024, including holding discussions with various stakeholders in relation to its liquidity position in light of adverse trading and other conditions,” says The Star in an ASX announcement today.
“The company confirms that the advice being provided has extended, from time to time, to considering the application of provisions of the Corporations Act 2001 (including the safe harbour provisions).”
Safe harbour provisions allow company directors to address financial distress behind the scenes without the need to notify the market. It broadly allows directors to explore restructuring options to shore up a company’s financial position and it is generally cheaper and less disruptive for companies than voluntary administration.
“The company is working to finalise its FY24 preliminary financial report, although the timing of its release has not been finalised,” says The Star.
The Star says it will update shareholders on its financial and liquidity position when it releases its FY24 preliminary financial report. The company expects its shares to resume trading once the financial report is released.
The Star’s shares last traded at 45c each.
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