Star hits pause on plan
Company’s loss despite Coast’s 30 per cent lift
STAR Entertainment Group will push the expansion of its $2bn Gold Coast masterplan back by at least a year after reporting a $1.2bn half-year loss.
A decision on the future of its Broadbeach island expansion is now expected to be made in 2024 as the company launches an $800m capital raising from shareholders.
The tough financial news comes in the wake of damning findings that it was unsuitable to hold casino licences in Queensland.
In December the gambling giant was slapped with a $100m fine from the state government and given a year to “get their house in order” or face a 90-day licence suspension. While its Sydney casino has failed to bounce back from the impacts of the Covid pandemic, the Gold Coast complex’s revenue has increased 30 per cent on pre-2020 levels.
Star chief executive Robbie Cooke told the Bulletin they were “good results in choppy waters”.
“The (Gold Coast) is our best-performing property by achieving a 30 per cent uplift on pre-Covid levels, and it reinforces the investment in new hotels, the food and beverage at the property and the way we have worked with the convention market,” he said.
“If you put in the investments, you get the outcome, so we are very pleased with this performance.
“The Gold Coast has smashed it out of the park.”
The capital raising will include a $115m institutional placement and be used to reduce the company’s net debt by $770m to $341m. It will target a leverage ratio of 2-2.5 times over the longer term and suspend all dividends until it reaches that goal.
Star’s half-year loss included a writedown of $988m on its flagship Sydney casino after the NSW government announced proposed changes to lift the state’s casino tax rate.
The company had warned investors the earnings hit could be as high as $1.6bn.
Star Sydney’s revenue jumped 127 per cent to $541m during the half year. But it was down 14 per cent on pre-pandemic levels.
Mr Cooke said the company’s focus would move to its future strategy following the capital raise, but there would be no move to fast-track further towers on the Broadbeach site.
“Our focus is on tower 2 at the moment and (any decision about further high-rises) will be in the next calendar year,” he said.
“We want to get tower 2 done, up and running and in the market before looking at the next tower.”
The $2.3bn masterplan, approved by the state government nearly five years ago, includes four towers of 65, 74, 54 and 52 storeys for a total of 1794 apartments and 518 rooms. The Dorsett and Star Residences tower opened on Boxing Day, 2021, while construction continues on tower 2, known as Epsilon, which is expected to open in 2024.
Star’s Queensland operations lifted overall revenue for the half-year 75 per cent to $1.01bn.