Australia's Star Entertainment To Raise USD 545M To Repay Debts

Star Entertainment Group Ltd said it was raising A$800 million ($545 million) to repay debt and suspend dividend payments.

Regulatory restrictions on its Sydney operations beginning in mid-September, as well as stiff competition from larger rival Crown Resort, which began operating there in August, have reduced profits for Star, Australia's second-largest casino operator.

The capital raise, which includes a A$685 million 3-for-5 rights offer and a A$115 million institutional placement, will assist Star in repaying debt and increasing liquidity, the company said on Thursday. As of the end of 2022, it had a net debt of A$1.11 billion.

The shares in the capital raising are being sold for A$1.20 each, which is 21% less than Star's most recent closing price of A$1.52.

According to Star, major shareholders Chow Tai Fook Enterprises and Far East Consortium have exercised their rights and committed $80 million to the capital raising.

Star reported a record statutory net loss after tax of A$1.26 billion for the first half of the year ended Dec. 31, compared to a loss of A$74.2 million the previous year.

Star had previously warned of a A$1.6 billion impairment charge in the first half as a result of the New South Wales government's proposal to raise taxes on casino poker machine operators. Sydney is the state's capital.

"Tax resolution with New South Wales government remains the key catalyst for investors," Jefferies analysts said in a note.

In the first half, the casino operator also reduced the goodwill of its Sydney casino from A$851 million to zero.

It stated that it would suspend dividend payments in order to reduce its debt, and that its casino licences were fully operational.

However, the company reported A$43.6 million in normalised net profit after tax, compared to A$73.7 million in losses the previous year.

While the capital raising is taking place, Star shares are not trading on Thursday.