Fri, Apr 17, 11:30am by William Brown
Casino group The Star Entertainment Group has secured $200m in additional debt funding and slashed its operating costs to just $10m a month as it hunkers down to ride out the federal government’s coronavirus casino shutdown.
The Australian Financial Review reports that the Star said on Thursday the additional $200m means it now has cash and undrawn debt facilities of about $700m.
This should give it plenty of breathing space, according to its own reports.
The Star said on Thursday its estimated that its cash requirements under a three-month lockdown until June 30 are about $220m.
A six-month shutdown, until September 30, would see it burn through about $320m.
The shutdown of Australia’s casino sector on March 23 saw The Star stand down about 8500 staff.
This has meant its operating costs – comprising payments to employees who are not stood down, asset security, technology and other fixed costs – are just $10m a month.
“These unprecedented challenges have had a considerable human impact,” The Star chairman John O’Neill said.
“To temporarily stand down more than 90 per cent of our dedicated workforce will be the most painful decision our senior management is every likely to encounter.”
The Star will now tap the government’s $130b JobKeeper wage subsidy program.
The group will also cut capital expenditure for the remainder of the 2020 financial year by $25 million to $225 million, and look to “significantly reduce” its $175 million capex estimate for the 2021 financial year.
The group’s contributions to its joint venture projects, which are mainly related to its Queen Street Wharf casino project and expansions of its Gold Coast property, will be $175m in the current financial year.
Shares in The Star have tumbled from $4.43 at the market’s peak on February 20 to $2.34.
The Star Entertainment Group has secured $200 million in additional debt funding and slashed operating costs to just $10 million a month. https://t.co/ePDMQnzfmL
— Financial Review (@FinancialReview) April 16, 2020
The Star Entertainment Group is the latest to defer their payouts to shareholders as they cope with lockdown measures that have devastated their business.
News.com.au reports that The Star will defer payment of its interim dividend for three months as it copes with the lockdown measures, which have forced it to close its casinos and stand down 90 per cent of its workforce.
The Star says it will now pay its interim dividend on July 2 rather than April 1, and will not pay a final dividend as it tries to position the company for a post coronavirus recovery.
The Star Entertainment Group has been forced to stand down 90 per cent of its 9,000 strong workforce at its casinos on the Gold Coast, Brisbane and Sydney.
My GC reported last week that coronavirus is to blame for the stand down, with casinos, bars and restaurants shut.
The company’s hotels remain open, but in a reduced capacity.
In a statement to the ASX on Thursday, Star said the shutdown of casinos will have a “material impact on The Star’s operations.”
“Management is focused on implementing strategies to minimise impacts and conserve liquidity.
“These include materially lowering operating costs and reducing capital expenditure.
“The Star has taken a very difficult, but necessary decision in relation to its workforce.
“We are in the process of temporarily standing down more than 90 per cent of our approximately 9,000 employees. These stand downs include senior management.”
Employees who are stood down will be given two weeks of paid pandemic leave.
Staff will also be able to access any annual or long service leave they have accrued.
The Board and senior management will have their directors’ fees and salaries slashed with details of those arrangements to be finalised in coming days.
“The Star will continue to monitor developments in the coronavirus situation and the impacts on The Star’s business.
“At this time, we are unable to reliably advise of the impacts on financial performance due to the uncertain duration of the current circumstances.”
Residents of Canberra who are prevented from playing pokie machines near their home due to COVID-19 restrictions are crossing into New South…
A Supreme Court of Appeal case against a former baccarat dealer and an alleged accomplice could collapse after the court found the…
Relax Gaming has its eyes set on expansion as the gaming company prepares to expand into Romania thanks to a deal with…