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Star reveals steep discount in $1.2 billion funding deal

Casino operator Star Entertainment has revealed a $1.2 billion debt and equity raising at 60 cents a share, a 20 per cent discount to its last trading price, and told investors that it has suspended dividends.

Sep 26, 2023, updated Sep 26, 2023
The Queens Wharf project was on target for an April opening (image supplied)

The Queens Wharf project was on target for an April opening (image supplied)

The company, which is a partner in the massive Queens Wharf development in Brisbane, said it had raised $589 million in equity, which included a $161 million institutional placement. Another $450 million would come from new debt facilities from Barclays and Westpac.

It follows a period of upheaval for the company following the damaging revelations out of two inquiries and the resulting fines from the NSW and Queensland Governments of $100 million each.

It said the new package would improve its funding arrangements and capital structure, but the new shares were priced at 60 cents, well below its last trading price of 75 cents. A year ago, the company was trading at $2.40.

Seven months ago Star raised $800 million from investors.

“The Star has undertaken an extensive process and evaluated a range of funding and asset sale alternatives, including property monetisation, equity, equity-linked financing, subordinated debt and larger non-bank lender packages,” the company said.

“Today’s announcement represents a culmination of this process.”

Shares in the company were expected to return to trade tomorrow.

“The Star believes that the refinancing and further capital structure initiatives are designed to provide the Star with increased financial flexibility to address known and expected liabilities over the medium term and help finance the ongoing needs of the business and expected joint venture contributions.”

The package would mean that existing debt would be repaid.

The company said dividends were suspended until the adjusted net leverage ratio is below 1.5 times and investigations by AUSTRAC’s civil case was completed. It also had to complete the Queens Wharf debt refinancing and has another potential fine coming from the Queensland Office or Liquor and Gaming Regulation.

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A class action could also add to the pile of problems for the company.

Chief executive Robbie Cooke said it was a key milestone for the company.

“With an optimised capital structure, strengthened balance sheet and enhanced flexibility, we have a strong platform frmo which to deliver on our renewal program and strategic priorities,” Cooke said.

The equity portion of the deal is a 1:1.65 pro rata accelerated, non-renounceable entitlement offer of new shares. There was also a $161 million institutional placement.

The entitlement offer would be conducted at 60 cents.

 

 

 

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