By Scott Murdoch
(Reuters) -Australia’s embattled casino operator Star Entertainment reported a bigger-than-expected first-half loss on Tuesday, as remediation costs continue to bite even though it has a rescue package already underway.
Star’s fortunes have dimmed amid regulatory probes over possible violations of anti-money laundering and counter-terrorism laws and a slump in revenue. A trading suspension of the company’s shares since February for not lodging its financial results will end on Wednesday.
Stricter regulations and weaker discretionary spending pushed Star to a net loss of A$302 million ($191.92 million) for the six months ended December 31, the company said in a filing to the ASX. Revenue in the half fell A$216 million to A$650 million, the filings showed.
"Clearly our performance continues to be very challenged as we navigate through a very difficult trading environment, we have been working very hard on establishing additional liquidity to allow the company to continue trading through," CEO Steve McCann told an investor call.
The New South Wales government has introduced new laws that ban using cash for gaming in the state’s casinos to prevent money laundering, but not at pubs and clubs, which has had a major impact on Star’s revenues, McCann said.
"The ongoing impact of regulatory reforms ... and our loss of market share across the Sydney and Gold Coast properties has had a material impact on the business and we are continuing to operating in very challenging conditions."
Star last week agreed to an A$300 million rescue package from U.S. group Bally’s and major Star shareholders the Mathieson family, with the refinancing proposal coming as a lifeline after a loan from investment group Salter Brothers Capital collapsed earlier this month.
A shareholder vote will be held in June to approve part of Bally’s investment that will give the U.S casino group control of 56.7% of Star.
Star’s board has recommended investors vote in favour of the deal in the absence of a superior offer. Bally’s Chairman Soo Kim told Reuters on Monday the firm swooped on Star as the Australian-based group began selling assets to survive.
Star said revenue fell in the third quarter of the year because of reduced gaming visits and adverse weather events, with its Sydney casino’s revenue declining by 8% compared to the second quarter.
Star’s Gold Coast casino performance was also impacted in the third quarter by a five-day property closure due to Cyclone Alfred, with the impact on its earnings before interest, taxes depreciation and amortization (EBITDA) estimated to be around A$3 million.
Since 2021, Star has been embroiled in a number of government probes over possible breaches of anti-money laundering and counter-terrorism laws.
($1 = 1.5736 Australian dollars)