Yet another after-market close announcement from Star Entertainment (ASX:SGR) surfaced on Monday evening, with media reports indicating that the company is set to be bailed out by its lenders under a five-point plan. This plan is designed to give the gaming group’s new CEO, Steve McCann, the chance to turn around its performance without selling any of its three casinos.
According to the Australian Financial Review, the company’s lenders have verbally committed to providing a two-tranche extension to the casino operator’s loans. This includes an immediate $100 million injection to address urgent cost blowouts at its new Queens Wharf facility in Brisbane.
Last week, there was talk of negotiations over a $150 million advance from its banks.
The Queens Wharf project is heavily over budget, with a final cost exceeding $3.6 billion, compared to the original estimate of $2 billion. Thanks to COVID-19, the project is also two years behind schedule.
Star didn’t have enough money to complete the opening of the facility, nor the working capital to ride out the start-up losses.
The company still faces a September 27 deadline from the NSW gambling regulator regarding a show-cause notice about its Sydney licence, along with a potential fine of up to $100 million. Star is likely to request that any fine be postponed or paid in instalments. Last week, the company stated that it could mount an argument against losing its licence.
Additionally, Star must produce its June 30 accounts, which are expected to show significant write-downs in the value of Queens Wharf.