Star Entertainment Group Ltd announced a refinancing action. The Australian gambling giant revealed that it is seeking to raise as much as AU$1.2 billion through a combination of debt and equity after a recent crackdown on money laundering and associations with criminal organisations across the country’s gambling sector undermined its financial capabilities.
On September 25th, the company issued a statement unveiling a decision to launch an AU$750-million equity raising at the price of AU$0.60 per share through the Australian financial service provider Barrenjoey Markets Pty. The offer involves a 1 for 1.65 entitlement offer for the company’s current retail shareholders to raise approximately AU$589 million. Apart from that, a placement worth about AU$161 million worth of shares for institutional investors was also part of the offer.
The announced price represents a 20% discount to Star Entertainment Group’s last closing price on September 22nd, 2023.
Furthermore, the Australian gambling operator also announced a four-year debt package worth AU$450 million that was backed by Barclays Plc and Westpac Banking Corp. The debt package consists of a revolving credit facility estimated to AU$150 million and an underwritten term loan worth a total of AU$300 million.
Second-Largest Casino Operator in Australia Faces Financial Difficulties
As previously reported by Casino Guardian, Star Entertainment has been facing some financial difficulties lately. The company’s share value has declined by over 50% so far in 2023, as the country’s regulatory bodies have been focused on the community impact and compliance of the gambling operator. According to reports, the company spent more on compliance, while its discretionary spending has declined.
Star Entertainment Group cut over 500 jobs and announced an AU$2.44-billion net loss in the last fiscal year.
Market experts believe that the equity deal would make the company the largest tapper of the country’s share market in 2023, with the raisings in the second and third fiscal quarters. In February, Star Entertainment managed to raise AU$800 million via an equity fundraising that is structured in a similar manner, with an institutional placement of AU$115 million and an AU$685-million rights offer.
As a result of some regulatory restrictions imposed on the company’s operations in Sydney in the middle of 2022 and fierce competition from its bigger local rival Crown Resorts, Star Entertainment has seen a profit decline. As of June 30th, 2023, the operator’s net debt was estimated at AU$596 million, with the figure representing a massive decline from Star’s debt levels of AU$1.11 billion at the end of 2022.
The gambling giant announced an AU$41-million net profit after tax and before significant items for fiscal 2023. In comparison, it posted an AU$31-million loss a year earlier. As Casino Guardian reported, the operator was also hit by a massive impairment charge worth AU$2.48 billion, taxes excluded. As a result, Star Entertainment was forced to make significant items writedown from volatile operating conditions at its operations in Sydney and legal and regulatory costs.
Olivia Cole has worked as a journalist for several years now. Over the last couple of years she has been engaged in writing about a number of industries and has developed an interest for the gambling market in the UK.