Beleaguered Star sends out an SOS

Having dug a financial hole for itself, Star Entertainment is now asking everyone – shareholders, its lenders and the NSW government – to take pity on it: a pitch that feels a touch rich.

Last year, The Star was found unfit to hold a casino licence in NSW and Queensland, after two state government inquiries uncovered a litany of misconduct. If anything, the casino operator pretty much used up its quota of good luck when both governments allowed it to keep a provisional licence after it promised to clean up its act.

But going cap in hand to the market is pretty much the only choice the casino group has if it is to repair its finances. Stakeholders need to pitch in or risk the potentially dire consequences of upsetting The Star’s lenders.

By posting a statutory loss of $1.2 billion on Thursday, mainly on the back of a writedown on the Sydney casino’s goodwill, The Star has managed to show the market just how bad things are financially. Pulling the plug on dividends, until it secures a firm financial footing, also sends a message.

The Star’s new management does have a plan in play, which is likely to give it the breathing space it needs to bring its house in order, by announcing it would raise $800 million from shareholders and cutting a deal with its lenders for a bit of additional grace on its debt.

Chief executive Robbie Cooke has also appealed to the NSW government to walk back its decision to impose additional taxes on poker machine and gaming table revenue. And there might be some good news on that front as well.

NSW Treasurer Matt Kean certainly sounds like he is listening to The Star’s appeal – despite his government going into an election next month with an anti-gambling platform.

But that’s just one of the financial headwinds facing The Star. It has a newly imposed pile of regulations to contend with in NSW and Queensland, and the road to compliance won’t come cheap.