Hundreds of head office jobs will be culled at Star Entertainment as it tries to weather a significant short-term cash crunch after posting a loss of almost $2 billion.
Star posted a $1.7 billion loss after writing down the value of its three casinos by a total of $1.44 billion and has tapped its corporate lenders for another $200 million.
The troubled gaming company on Thursday said trading had deteriorated during 2023/24 and the decline had continued into the first few months of 2024/25.
Star lost $6.6 million in earnings before interest, tax, depreciation and amortisation (EBITDA, or underlying earnings) in July, although technology outages were partly to blame.
It lost $1.1 million in underlying earnings in August and suffered further deterioration in September.
The business needed turning around, Star's incoming chief executive Steve McCann told analysts on Thursday.
"We obviously need to arrest the current situation of negative EBITDA and get back to a profitable operating environment," he said.
Star plans to reduce its headcount by the equivalent of 350 full-time roles in its group corporate offices by March and will adopt a hiring and salary freeze in a bid to save $100 million a year.
Star had $130 million in available cash as of August 31, but faces significant near-term liquidity requirements, including funding its operations, remediation activities, contributions to the Queens Wharf joint venture and outflows related to ongoing regulatory matters.
“There are a number of significant challenges currently facing the business from an earnings, liquidity and balance sheet perspective," Mr McCann said.
Earlier on Thursday, Star announced its corporate lenders had committed to loaning it up to another $200 million at an interest rate of 13.5 per cent.
All but $34 million of the casino group's $334 million in debt has also been repriced at the moderately high rate, reflecting concerns about its financial viability.
The sale of Star's Treasury Brisbane Casino property to Griffith University is expected to close on Friday, providing the company with a net cash injection of $60.7 million.
It is reviewing the potential sale of other assets, including the Treasury hotel and car park, which are not included in the Griffith University sale, as well its Darling hotels in Sydney and the Gold Coast.
Star said its revenue for 2023/24 was down 10 per cent to $1.68 billion, partly because of cost-of-living pressures but also because it had lost market share, particularly when it came to the high rollers who gamble in its private gaming rooms.
"The customer experience is obviously not what it should be at the moment and our competitors are working very, very hard to take advantage of that," Mr McCann said.
"We're working hard on that customer experience."
Further limits on cash play at Star's casinos will go into effect on October 19 and then tighten in a year's time, with a $1,000 cash limit imposed on all punters, which Mr McCann acknowledged could have further impacts on the company.
Star's shares have been suspended on the ASX because of the delayed financial reporting but Mr McCann hoped trading would resume on Friday.
