Casino operator Star Entertainment will cancel all executive bonusses, freeze salaries and axe 500 jobs after “experiencing a significant and rapid deterioration in operating conditions” particularly at its Sydney and Gold Coast casinos.
The company flagged earnings of between $280 million and $310 million to the ASX yesterday. This was still an improvement on 2022’s COVID-affected earnings of $237 million.
“To put the operating environment into perspective, the group’s current earnings performance is at unprecedented low levels (excluding the COVID-19 period),” the company’s ASX statement said.
Star has been under fire since probes in NSW and Queensland found it had allowed criminals to do business at its casinos, misled regulators and engaged in “inherently deceptive and unethical” conduct.
The financial forecasts have excluded provisions for potential fines and costs arising out of the ongoing regulatory reviews.
“The Star Sydney continues to operate in an uneven competitive environment as it relates to the regulatory settings for complimentary services in its private gaming areas,” the company told the ASX.
Star Entertainment owns and operates the Treasury Casino in Brisbane, The Star, Gold Coast, and The Star Sydney, and it has a 50% stake in the Sheraton Mirage resort on the Southport Spit on the Gold Coast which is up for sale. The group also manages the Gold Coast Convention and Exhibition Centre on behalf of the Queensland Government.
The 500 job cuts will come from across the workforce of 8000 but would exclude risk management roles.
In other updates, the company said it was “continuing to progress the proposed sale of the Sheraton Grand Mirage Resort Gold Coast, with indicative bids from interested parties due shortly”.
“The group is accelerating its previously foreshadowed plans to refinance its existing debt funding arrangements, with a focus on improving the group’s liquidity position and separately increasing covenant headroom in light of the group’s current earnings environment,” it said.
“To help improve the group’s liquidity position and maximise the prospects of a successful refinancing given the challenging operating environment, The Star intends to engage with the NSW Government, the Queensland Government and AUSTRAC in respect of casino duty rates and flexibility on payment terms in relation to any current and future penalties.”
The announcement comes after the new NSW government said it would conduct an urgent review of proposed casino tax increases. The mere prospect of such a review had seen Star write down the value of its Sydney casino by $988 million.
Star Entertainment Group Ltd (ASX SGR) dropped 14c in early trading today to a low of $1.22, down from its 52-week high of $2.98 in April last year, having usually traded above $4 for the six years before COVID-19.