Casino Operator Star Entertainment to Raise $481 mn in Capital for Balance Sheet Strengthening

Australian casino operator Star Entertainment Group has announced its intentions to raise A$750 million ($481.43 million) through capital markets in a bid to undergo a significant capital restructure, aimed at fortifying its balance sheet.
Dollar spending on technologyThe company revealed its plans to raise capital at A60c per share, reflecting a 20 percent discount to the final closing price of A75c last Friday.

The capital raise comprises a A$589 million 1 for 1.65 pro-rata accelerated non-renounceable entitlement offer and a A$161 million institutional placement, according to a statement issued by Star Entertainment Group.

In addition to the capital infusion, Star Entertainment Group disclosed that it would secure A$450 million in new debt through Barclays and Westpac. This new debt will be utilized to repay and cancel the company’s existing debt as part of the capital restructure.

This marks the second capital raising effort by Star Entertainment Group in 2023, following a successful A$800 million raise in February at A$1.20 per share, double the price set for the current capital raising.

The casino operator has faced challenges, including regulatory restrictions on its Sydney operations since mid-2022 and intense competition from Crown Resort, a larger rival. These factors have impacted Star Entertainment Group’s profits.

As of June 30, Star Entertainment Group had a net debt of A$596 million, reflecting a significant reduction from the A$1.11 billion debt levels at the end of 2022. For fiscal year 2023, the company reported a net profit after tax attributable to shareholders of A$41 million, compared to a loss of A$31 million the previous year, Reuters news report said.

However, Star Entertainment Group also noted a substantial impairment charge of A$2.48 billion, excluding taxes, primarily due to write-downs related to challenging operating conditions at its Sydney operations and increased regulatory and legal costs.