Star Entertainment Group will sell its Sydney precinct’s event complex for $60 million as the beleaguered casino operator tries to raise cash to avoid going under.
The company last week alerted the market it suffered another revenue drop in the December quarter and would need to raise funds to continue operating.
Star had just $78m left as of December 31 after churning through $107m over the previous three months.
It was also revealed on January 17 that Star had used a safe harbour legal provision to protect its company directors if it were to trade on the ASX while insolvent.
In an update to the stock market, Star revealed it had signed a deal to sell its Sydney event centre and other unspecified spaces in the precinct to Foundation Theatres for $60m.
The payment will come to Star by Friday as the cash-strapped casino operator desperately tries to secure more money.
Star’s CEO Steve McCann praised the move and noted the casino operator was looking into other parts of its operations to sell.
“The Star has worked closely with the team at Foundation Theatres since they acquired the sublease for the Sydney Lyric in 2011,” he said in a statement.
“We are pleased to partner with them as part of the continued evolution of our broad entertainment offerings at The Star Sydney.
“We continue to work on a number of other potential non-core asset transactions.”
Star’s event centre operates on a large scale and hosts many statement events, such as the 2024 Logie Awards.
An anonymous source told the Australian Financial Review the theatre space – which operates on multiple floors – was sold for far less than its worth.
“One theatre alone is worth more than double this, as every assessment in Sydney conducted has determined,” they said.
“Sydney desperately needs more theatres, but the last thing we need is more theatres inside a casino.”
News of the sale has sent Star’s share price skyrocketing up almost nine per cent on Wednesday.
Speaking on the company’s future, a leading analyst on Sunday warned that Star has a “50 per cent chance” of failing.
“There is a chance Star falls into administration but there is also a path out of this,” Morningstar analyst Angus Hewitt told Sky News’ Business Weekend.
“We’re currently modelling a 50 per cent chance.”
In September, Star revealed it had secured upwards of $200 million in a loan package to be handed down in two tranches.
Star has already drawn down from the first $100 million, but said it would struggle to secure the remaining cash as it is the subject of stricter borrowing conditions.
The main issue for Star is raising $150 million of subordinated debt – a low priority loan that is not necessarily secured by a company’s assets or other forms of collateral.
It is paid off last if a company enters liquidation.
In another bid to save the casino operator, Mr McCann has called on the Queensland and New South Wales governments to offer the group relief on gaming taxes to prevent it entering administration.
While NSW Premier Chris Minns rejected the plea, Queensland Premier David Crisafulli said he would “consider any requests that come forward”, but stressed that he was primarily concerned with workers at the casino operator.
‘ The preceding article may include information circulated by third parties ’
‘ Some details of this article were extracted from the following source www.skynews.com.au ’
