Star assures irate investors it has no intention of raising more money
Star Entertainment chairman David Foster has told investors the company had no intention to raise more money – “based on what we know today” – after finding $1.6 billion in new funds in the last seven months.
Mr Foster and Robbie Cooke, the casino operator’s chief executive, faced irate shareholders at the company’s annual meeting on the Gold Coast on Thursday after a difficult 12-month period. Star has written down the value of its casinos in Sydney, Gold Coast and Brisbane by $2.2 billion and faces major penalties after being sued by AUSTRAC for anti-money laundering failures. It also narrowly avoided losing its licence in NSW.
Star boss Robbie Cooke said the company remains committed to change. Louie Douvis
Star’s share price has fallen 70 per cent since Mr Cooke was appointed in October last year, and the company has been forced to raise $1.6 billion in that time. One investor at the meeting, former Rothschild investment banker David Kingston, told Mr Cooke he should be embarrassed by the share price performance, noting the company’s market value of $1.6 billion was almost an identical amount to money raised in February and September.
“The most bizarre thing is this [valuation] is marginally more than what you have raised,” Mr Kingston said. “Without the two raisings the company would have been bankrupt.”
Mr Cooke said the previous share price – the company traded higher than $5 per share in 2018 – was fuelled by “unlawful behaviour and criminals”.
“I’m not embarrassed, but I absolutely know it’s challenging. I feel the pain of shareholders every day,” Mr Cooke said. “I’m working seven days a week, 18 hours a day to resolve it. But this is not a quick fix.”
Star managed to avoid a second back-to-back remuneration strike, with only 17.2 per cent of shareholders voting against the board. More than 80 per cent voted in favour of one-off retention equity rights to Mr Cooke.
Investors also raised concerns about whether there would be a need for a third emergency capital raising. Mr Foster said it was unlikely to happen again. “The business was over-levered historically, and we did need to confront a looming refinancing of the large debt stack we had, and, at the same time, top-line pressures,” he said. “We looked at debt, lease and sale options around property but felt that would be very short term in terms of giving away strategic value in the long term.”
Mr Cooke told investors average monthly revenue between July and October was up 2.5 per cent compared to the three months to June 30.
A fine levied by AUSTRAC and four class actions weighed on the company in the last financial year. The opening of Crown Resorts’ gaming floor in Sydney has created competition for its flagship casino, and lengthy delays in a major construction project at Queen’s Wharf in Brisbane have exacerbated issues in an already challenged business. The company launched a capital raising in February, but then was forced to raise more money in September.
The second raising and new loan facilities were conducted to eliminate Star’s hefty debt load and help fund costs associated with Queen’s Wharf. It also allowed the company to avoid selling its flagship Sydney casino.
Star has provisioned for a $150 million AUSTRAC penalty even though its rival, Crown Resorts, was fined $450 million.
Shares closed at 57¢ on Thursday.
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