No wonder shares in Star Entertainment Group (ASX:SGR) lost another 14% on Tuesday, following further damning disclosures during the second day of the inquiry into the company’s culture and fitness to hold a license for the Star Casino in Sydney.
The shares had already dropped over 4% on Monday, as investors grappled with other news, including the Bondi Junction stabbing attack and the Bruce Lehrmann judgment. However, by yesterday, investors had the chance to digest the incredulous revelations from the inquiry. It was revealed that the board, chair, and CEO were allegedly conspiring to organize a class action against the casino regulator, while also overseeing the theft of $3.2 million from a cash payout machine over seven weeks.
On Tuesday, the inquiry further uncovered how management had attempted to conceal this loss. Consequently, shares plummeted to 42 cents at the close, reaching a new all-time low of 41 cents during trading.
With a total market value of $1.18 billion, analysts are questioning the breakdown of this figure: how much reflects the value of The Star itself (without its license, merely a costly structure), and how much pertains to the Queensland casinos—Brisbane and Gold Coast—and the impending Brisbane entertainment complex.
These questions gain significance given the claims made on the first day of the inquiry, which appear to support the contention by the NSW regulator that there are systemic issues within Star’s culture, leadership, and potentially among some shareholders. This is despite a previous clean-out and another anticipated this year, essential for license retention.
Analysts are also pondering the Queensland government’s stance on protecting licenses for Brisbane and Gold Coast casinos. Will they mandate separation from the Sydney business, or are there yet-to-be-revealed disclosures about these northern operations?
Former Chief Financial Officer, Christina Katsibouba, took the spotlight on Tuesday, alleging that former CEO Robbie Cooke concealed the gaming group’s true debt and the views of the casino’s supervisor from executives. Katsibouba further claimed she was asked to manipulate financial records to present a healthier picture of the company’s finances. Among various allegations, she revealed that The Star’s head of investor relations, Giovanni Rizzo, requested her to manipulate the half-year results to conceal a $3.2 million cash loss inadvertently given to customers by Star Sydney.
These claims add weight to Nick Weeks’ statements, the Star’s special manager appointed by the regulator, who, on the first day of the inquiry, revealed the failure to address a malfunctioning cash payout machine, leading to the loss of $3.2 million over seven weeks in June last year.