Star posts massive loss as 1H25 financials finally revealed

In a pivotal moment for Australia’s Star Entertainment, the company unveiled its financial report for the six months ending December 31, revealing a dramatic decline in revenue and a staggering net loss of AU$302 million (£144.6 million/€169.2 million/US$191.6 million). This announcement comes amidst a recent AU$300 million takeover bid from Bally’s Corporation and Investment Holdings, injecting fresh hope into the beleaguered gaming operator.

Star’s report for the first half of fiscal year 2025, submitted to the Australian Securities Exchange (ASX) over a month past the February 28 deadline, sheds light on the company’s precarious financial position. A failed refinancing effort through Salter Brothers left the company in dire straits, prompting the company to accept Bally’s bid as a necessary lifeline.

From the total takeover amount, Bally’s committed AU$200 million, while Investment Holdings, steered by Bruce Mathieson—Star’s largest shareholder—will provide the remaining funds. The company received its first tranche of AU$100 million on April 9, which has momentarily stabilized its operations.

Star’s overall revenue for the first half of FY2025 reached AU$649.6 million, reflecting a 25% decline year-on-year. Of particular concern is the gaming revenue, which slipped by 32% to AU$464 million. Conversely, non-gaming revenue showed a slight uptick of 1.8% to AU$185.6 million. The company’s EBITDA plummeted from AU$113.6 million in FY2024 to a loss of AU$26.4 million in the current period.

The report also highlights “significant items,” amounting to AU$166.2 million in fines, debt refinancing costs, and other expenditures, significantly contributing to the company’s net loss of AU$302 million.

Liquidity Remains a Critical Concern

Of paramount interest to stakeholders is Star’s cash balance, which stood at AU$98 million as of April 11—just two days after the initial AU$100 million influx from Bally’s. This precarious cash position indicates that the company had nearly exhausted its reserves before securing this financial lifeline.

Star’s liquidity challenges have been evident since January 8, when it disclosed severe cash flow issues, reporting a staggering AU$107 million burn in the fourth quarter of FY2024. However, the first tranche from the takeover, combined with Star’s AU$60 million sale of the Star Sydney Event Centre, has provided temporary relief until Bally’s fully integrates into the firm. A crucial shareholder meeting to validate these developments is anticipated for late June.

Notably, Star’s report repeats a concerning assertion: “There remains material uncertainty regarding the group’s ability to continue as a going concern.” This caveat reflects ongoing speculation that multiple capital infusions may be necessary for the company’s recovery trajectory.

Highlights at Property Level

Dissecting Star’s performance at the property level reveals more challenges. The flagship Star Sydney reported a net revenue of AU$362.2 million, a decline of 19.5% year-on-year, while EBITDA plummeted from AU$37.4 million to a loss of AU$24.6 million. The company attributes these downturns to ongoing regulatory adjustments, including enhanced operational controls, the implementation of mandatory carded play, cash usage restrictions, and a loss of market share driven by broader economic conditions.

Since October 19, 2024, the mandatory carded play and cash limits have been in effect. Compounding these issues, Star Sydney’s casino licence currently faces suspension until September 30 due to failure in two separate suitability inquiries, with the facility remaining under strict state supervision.

Meanwhile, Star Gold Coast, also under regulatory watch and with a potential licence suspension looming, reported AU$218.2 million in net revenue— an 8.4% decrease year-on-year. Although the EBITDA remained positive at AU$18.1 million, it marked a 59% year-on-year decline. The challenges faced by Star Gold Coast closely mirror those at Star Sydney.

Treasury Brisbane recorded AU$54.8 million in net revenue during the review period, but the venue closed on August 25, 2024. It has since been replaced by the newly launched Star Brisbane.

Brisbane Deal Progressing as Planned

In connection with Star Brisbane, the company is poised to finalize its exit from the joint venture, having agreed to sell its 50% stake to partners Chow Tai Fook (CTF) and Far East Consortium (FEC) for AU$53 million on March 7. While Bally’s had expressed interest in retaining full control of all assets, Star remains committed to executing this exit strategy.

The anticipated transaction is progressing smoothly, with the completion of long-form documentation expected by the end of April and a slated closing by the end of June. Star’s rationale behind this divestiture centers on cost mitigation. By relinquishing its stake, the company frees itself from the corporate guarantee tied to AU$1.4 billion in project debt and eliminates at least AU$212 million in future equity contributions. Additionally, Star has successfully renegotiated its operating fee for the casino, increasing it to AU$5 million per month through June 2026.

As part of this agreement, Star has consolidated full ownership of both hotel towers at Gold Coast, previously shared with CTF and FEC, which presents opportunities for future development—potentially adding three more towers. Although CTF and FEC retained development rights for one additional tower, Star has the option to purchase those rights for AU$17 million.