Star Entertainment's licence suspension in Sydney is prolonged
As the holding period drags on, Star Entertainment's licence suspension in Sydney is prolonged while the Gold Coast is postponed.
Star Entertainment is fighting for its survival, therefore today (28 March) it announced that its Sydney casino licence will be suspended until September and that its Gold Coast licence will also be stopped at the same time.
In an ASX filing, The Star revealed that the NSW Independent Casino Commission (NICC) has informed it that the suspension of its Star Sydney licence will be extended until 30 September.
On March 31, the suspension was set to expire, along with the tenure of Nicholas Weeks, the state-appointed independent manager. Both projects are currently six months behind schedule.
Star Sydney has been found unfit twice in the past three years, the most recent of which was in October. Since the initial verdict was handed out in late 2022, weeks has been in effect. It was at that point that the casino's licence was suspended.
There was talk that the NICC would completely cancel Star Sydney's licence following the second investigation. The casino's poisonous culture worsened after its initial repair attempts were found to have failed, according to the second study. Shockingly, regulators decided to prolong the ban all the way through September due to a number of factors, one of which was the June debut of Star Entertainment CEO Steve McCann.
Constraints on Star's financial resources
Star appears to have stabilised its remediation since McCann's appointment, but the company has encountered considerable financial difficulties.
The firm declared its financial woes and struggle for survival in January. It has now divested itself of assets and is presently in discussions with Salter Brothers Capital regarding a large refinancing package worth AU$940 million (£456.9 million/€261.5 million). As a result of these considerations, Star apparently decided to ask for the extension instead of fighting for it.
"According to NICC chief commissioner, Mr. Philip Crawford, the submissions showed that The Star has been making progress in its remediation, but progress has been slow due to uncertainty surrounding The Star's financial situation. As a result, the licence suspension should remain in effect," the NICC stated in a press release.
According to McCann, Star "appreciate(s) the comments made by the NICC in respect of the company's progress" in their filing. Star "recognises the importance of continuing to deliver on its commitments under the remediation plan and returning to suitability," he said, building on what Star had already said.
Rescheduled suspension for Gold Coast
Star, in a 180-degree turn from Sydney, also revealed that the 30th of September will now mark the beginning of a 90-day suspension of its Gold Coast licence in Queensland. At the same time, Weeks will have his term extended at the property he is overseeing.
Queensland initially investigated Star in 2022, and in October of that year, they decided she wasn't fit for licensure. A 90-day licence suspension was also ordered, but has been postponed multiple times, in addition to fines and Weeks' appointment.
In a press release, the Queensland state government cited the same grounds as the NICC for authorising the most recent delay.
As part of its decision, the government consulted the February report issued by special manager Mr. Nicholas Weeks, which detailed The Star's progress across priority remedial initiatives. "The Star's recent challenges have affected its ability to make material headway on some key measures within the set timeframe," Mr. Weeks said, "and he acknowledged that."
Possibilities are endless, but the future is unclear.
Having both extensions at its disposal has given Star additional time to assess its many existing possibilities. A more condensed and simplified form of the company has already been committed to in some areas.
Star reported on March 7 that it had sold its 50% interest in the Brisbane Queen's Wharf development, which is worth multibillion dollars, for AU$53 million. Chow Tai Fook and Far East Consortium, who were also partners in the joint company, were the recipients of the stake. The project was expected to be a huge engine for Star, but it turned out to be too pricey. It just opened last August. After selling its shares, Star was relieved of its financial obligations and its share of the project's debt.
Full ownership of Gold Coast was also repurchased by Star from the two partners as a component of the agreement. By doubling down on Gold Coast, the operator effectively punted on Queen's Wharf. "This plan will enhance The Star’s customer offering and provide further depth to its accommodation mix on the Gold Coast," the statement read.
Also in March, Bally's Corporation of the United States made a bid to acquire Star. A meeting between Bally's and Star, as well as a visit of Star's properties, was revealed in February. Although Bally's stated it was "very open" to a bigger acquisition, the initial offer was for AU$250 million, which would have acquired 50.1% of the company. The deadline for Bally's was Friday, as stated in the offer.
Additionally, Bally's expressed its disapproval of the Queen's Wharf purchase and its desire to maintain Star's assets in their whole. "Offers Star and its stakeholders far greater value and operational flexibility, as well as the upside from retaining Star's current projects and other assets," the US operator stated in respect to its bid.
