Wednesday, March 29, 2023
HomeBusinessLifeline allows Star to keep on punting along

Lifeline allows Star to keep on punting along

Casino group Star Entertainment Group (ASX:SGR) has secured its $800 million lifeline which will allow it to continue trading past the NSW state election Saturday week (a big tax rise depends on the result) and until the Federal Court rules on a fine for the company over breaches of money laundering laws at its gambling palaces in Sydney and Brisbane.

- Advertisement -

The company raised the money from retail and institutional shareholders – $203 million from retail shareholders at $1.20 per share, after securing $595 million from institutional shareholders earlier this month.

Star said around 10,100 retail shareholders applied for their entitlements, or about 53% of those eligible.

Approximately 80.5 million new shares that were not taken up under the retail entitlement offer will be taken up by the sub-underwriters of the share sale.

The Star capital raising came after the company revealed a $1.3 billion net loss for the six months to December that included four shareholder class actions, the suspension of the company’s Sydney casino licence and an escalating number of fines that could stack up to hundreds of millions of dollars.

The Star was also been the focus of two independent inquiries in NSW and Queensland into media reports of money laundering and other breaches.

The inquiries found the casino operator had enabled suspected money laundering, large-scale fraud, organised crime and foreign interference in its Australian casinos.

The reports and weak response from the company and its former board and management saw the shares plunge more than 65% in the past 8 months.

They traded around $1.42 after the statement on the fund raising. but dipped nearly 2.4% to $1.40 by the close.

Star’s CEO Robbie Cooke said the group was extremely appreciative of the retail shareholders’ contribution.

“As conveyed at the time of the institutional entitlement offer completion, the capital structure initiatives will provide The Star with a strengthened balance sheet to deliver on its key strategic priorities and to meet the capital requirements provisioned for,” he said in Thursday’s statement.

Star’s most immediate concerns is the NSW government’s proposal that would see poker machine profits being taxed at a top rate of 60.7% from the start of July (the new 2023-24 financial year), nearly double the current 31.57%.

Star says the tax increase would have would damage its business and CEO Cooke claims he would have slash $100 million from Star Sydney’s $450 million cost base.

In a further blow to the casino operator, the State Labor opposition said on Thursday it has no plans to reduce the tax rate if elected to government on March 25.

Opposition treasury spokesman Daniel Mookhey acknowledged the impact the tax rise could have on The Star’s workforce, but shot down any suggestion that a future Labor government would unwind the policy.

“We can’t make that commitment and, as we said at the time, it’s now been written into the budget and that has real implications as well,” he said last Thursday.

“We’re not going to this election with any proposal to reduce gambling taxes,” he said.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

Image & Story Credit:

- Advertisment -

Most Popular