Star is seconds from oblivion and its luck may have run out
It was mid-afternoon on Friday, but it was impossible to look away from the ASX screens that would deliver the news on whether Star Entertainment had managed to survive the day.
Administrators are at the ready, advisors are working overtime and the statements have surely been drafted, but the casino operator is still clinging to hope of a last-minute reprieve – what it calls a liquidity proposal.
On the line are 8000 jobs, the majority of which are in Sydney, almost 2000 hotel rooms risk closure and 60 bars and restaurants may shut if Australia’s major casino operator Star is declared bankrupt.
Once the company’s flagship asset, Star’s Sydney casino is now worth little more than its hotel rooms.Credit: Bloomberg
This is no tin pot company. Star’s casinos are major destinations in NSW and Queensland and a key part of their respective tourism ecosystem, feeding many small businesses like retailers and hairdressers that survive on trade generated by those drawn to gamble at the company’s sprawling gaming precincts.
State government coffers have also been boosted by tax revenues from Star for decades. So there is a lot riding on the future of Star and the countdown is on.
Star – or the “Death Star” as it has now become known – is giving no guarantees it will still be around next week. It has run out of money and may have only hours left to find a buyer or a genuine interested party for any of its assets to avoid declaring itself insolvent.
It’s the corporate version of the Doomsday Clock ticking closer to midnight, given Star is as close as it has ever been to financial oblivion.
The crisis remains fluid, but things are clearly dire enough for Star’s directors to be unable to meet Friday’s deadline to sign off on the company’s accounts. To do so will require them to declare the company could trade as an ongoing concern. However, in a statement on Friday morning, the board said it couldn’t do that unless it had a legitimate proposal that could deliver to Star some much-needed cash.
After months of unsuccessful negotiations with lenders and asset tyre-kickers, Star’s board has come up empty-handed. But in a bizarre twist of events, the company is now telling investors it was holding out for one or more proposals that could stay its execution.
