A troubled gaming group that owns some of the nation’s biggest casinos believes its financial woes should improve within days, although a collapse remains a real possibility.
Regulators on Friday signed off on a $300 million rescue package by US-based Bally’s Corp and pub baron Bruce Mathieson’s investment vehicle for Star Entertainment Group, and the deal is expected to convert to equity within days.
That will greatly help Star’s standing with its lenders, to whom it owes another $350 million, chief executive Steve McCann told shareholders at the company’s annual general meeting on the Gold Coast on Tuesday.
“However, there still remains material uncertainty regarding the group’s ability to continue as a going concern, with a number of critical milestones ahead,” Mr McCann said.
The road ahead remains very challenging, but the team has a plan it’s working on, he added.
Two of the biggest milestones include Star’s ability to persuade regulators in NSW and Queensland that it is once again suitable to hold its casino licenses, as well as a looming Federal Court penalty for historical money laundering violations.
Finance watchdog AUSTRAC has requested a $400 million fine, an amount Star says far exceeds its ability to pay.
Star’s outgoing chairwoman, Anne Ward, said the judge had previously indicated not to expect his judgment before September.
“Effectively, that means it could come out at any time,” she said.
“We have no insight or information as to where the judge is at in writing his judgment.”
Ms Ward was re-elected to the board on Tuesday, but plans to resign once the $300 million rescue package is finalised, with the last remaining paperwork expected to be completed this week.
Bally’s will own 38 per cent of Star once the deal is completed, and Mr Mathieson’s Investment Holdings will own 23 per cent.
Mr Ward said that investment was a culmination of a year-long effort to strengthen the group’s financial position during a time when liquidity was a major challenge.
The money-losing casino group posted a $13 million operating loss for the September quarter, leaving it with $168 million in available cash as of September 30.
Star has yet to recover from the money-laundering scandal uncovered by Nine newspapers and 60 Minutes in 2021, which led to regulators imposing strict limits on play that have deterred high rollers.
Several shareholders at Tuesday’s meeting complained about what they described as intrusive questions about their finances that they’d been required to answer before being allowed to gamble.
“You demand details of gambling winnings for the past five years, inheritance, and now expanded gifts, savings, government benefits or other assets,” one shareholder told the board.
However, Mr McCann said while he realised the questions could be intrusive, Star had no choice but to reject customers who refused to answer.
“That is a regulatory requirement, and our failure to do so is a breach,” he said.
“Each breach can attract a fine of up to $1 million.”
All the business of the meeting passed, with shareholders overwhelmingly approving Mr McCann’s $7.5 million executive pay packet, which includes a base salary and incentive bonuses.
In early afternoon trading, Star shares were changing hands at 10.75 cents, up 2.4 per cent from Monday. The stock had started the calendar year around 19 cents.
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