(Bloomberg) -- Star Entertainment Group Ltd. stock collapsed as it resumed trading after a confronting financial update showed the unprofitable casino operator needs to raise even more capital and trading conditions are deteriorating.
After almost a month-long suspension, about A$700 million ($480 million) was immediately wiped from Star’s market value. The removal of the trading halt allowed investors to price for the first time the multiple crises that risk overwhelming the Australian company.
The shares plummeted as much as 54% to 20.5 Australian cents at the open, before trading at 25 cents at 11:07 a.m. in Sydney. That sliced Star’s stock-market capitalization to around A$717 million.
Since late August, an inquiry has found Star remains unfit to operate its flagship Sydney casino, and the gaming regulator is weighing its response. Star has also been forced to borrow a further A$200 million at 13.5%, a junk-bond rate usually reserved for distressed borrowers.
“Look at that interest rate. That’s loan-shark territory,” said Leo Partridge, an analyst at Morgans Financial Ltd. in Brisbane. “It can definitely get worse from here.”
Star reported a A$1.69 billion annual loss late Thursday, wrote down the value of all its casinos, and revealed it needs yet more capital to weather a market that’s getting even weaker. The company also increased planned payments into its Brisbane gaming resort joint venture to about A$357 million over the next two years and beyond.
“The list of issues for Star to navigate continues to grow,” Simon Thackray, an analyst at Jefferies (Australia) Pty, said in a report. “At this point in time, we see considerable uncertainty.”
Thackray said the focus should be on Star’s ability to service its debt “given a deteriorating earnings base that is under structural pressure on both revenue and costs.”
Addressing analysts and investors on a call late Thursday, incoming Chief Executive Officer Steve McCann said the business “has clearly been on its knees.”
He said the fresh financing should support Star through to late-2025, and about A$300 million of assets, including hotels and at least one car park, could be sold to raise funds. McCann’s appointment still needs regulatory approval.
Star’s liquidity is key because the gaming regulator in New South Wales state needs to be convinced Star is financially viable to continue to run the Sydney casino. The watchdog also needs to be sure McCann has a cultural turnaround plan in place.
Star’s Sydney casino has been run by a government-appointed manager since a damning report in 2022 found it had lax anti-money laundering controls, allowed patrons to flout China’s capital controls and encouraged problem gamblers.
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