Between the lines, Star was warning the Liberal government at the time that higher tax rates could threaten its ability to keep all 8000 Sydney casino workers.
Star pulls the trigger now, Announced 500 layoffs from the company.
The $800 million in financing was supposed to do the job of repairing Star’s balance sheet, and shareholders have a right to question why it didn’t.
Or has Star been hit on the head by the stick of continuous disclosure honesty that has leaked to shareholders about the flaws and all financials of “unprecedently low” earnings performance (outside of COVID, when it’s closed or under limited guest when operating under the circumstances) ).
It feels like a little bit of both.
in february It announced that it raised $800 million in funding, which feels like a huge swing — considering the company’s capitalization is only $2.1 billion. The whole idea is that after the financing, it will pay down some debt, set aside some reserves to cover those two $100 million penalties, and get relief from lenders that apply strict financial parameters to their balance sheets.
The money was supposed to alleviate fines and debt problems that have constrained Star’s balance sheet.
Star now says it is accelerating plans to refinance debt and increase the “headroom” of loan covenants.
The raise was supposed to do the job of repairing Star’s balance sheet, and shareholders have every right to question why it didn’t.
There is no doubt that Star’s profits have fallen sharply since the announcement of its first-half earnings in February. First-half profits are a long way from booming, and Star Sydney is feeling the pinch of increased regulation (such as the inability to provide free drinks to VIPs) and remedial costs.
Cleaning up its act has been costly for The Star, which is now experiencing problems at its Gold Coast casino, which it says is now experiencing “rapidly deteriorating” operating conditions.
All these troubles were compounded by the loss of Sydney’s monopoly and, more recently, by deteriorating economic conditions. Pressure on discretionary spending.
As a result, Star’s February earnings (EBITDA) forecast of $330 million to $360 million for the current fiscal year has been restated to $280 million to $310 million.
This week’s Star announcement will be hard to hear for shareholders who have been buying the stock heavily over the past year thinking all the bad news has been factored in.
Investors must be hoping they’ll be rescued by a private equity predator looking to catch a meteor. Star’s rival Crown faced similar problems and was acquired by Blackstone. So there is precedent.
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