Star’s long-delayed 1H25 report shows AU$302 million loss but Bally’s deal offers new hope

Star published its 1H25 report to the ASX more than a month past the 28 February deadline. The operator had been unable to lodge the report due to its desperate financial situation. After a massive debt refinancing effort with Salter Brothers fell through, on 7 April Star agreed to an AU$300 million takeover bid from Bally’s Corp. and Investment Holdings.

Bally’s has pledged AU$200 million of that total and Investment Holdings, led by Star’s biggest shareholder Bruce Mathieson, will supply the remaining capital. Star received the first tranche of AU$100 million on 9 April, which allowed it to stay afloat for the time being.

Overall group revenue for 1H25 was AU$649.6 million, down 25% year-on-year. Gaming revenue accounted for AU$464 million, down 32% YoY. Non-gaming revenue increased 1.8% to AU$185.6 million. EBITDA tumbled from AU$113.6 million in 1H24 to a loss of AU$26.4 million a year later.

“Significant items”, accounting for AU$166.2 million worth of fines, debt refinancing costs and other considerations, more than doubled Star’s net losses to the AU$302 million total.

Liquidity top of mind

Of particular interest to the investing and gaming communities was Star’s cash balance, which was AU$98 million as of 11 April, two days after receiving the funds from the first AU$100 million takeover tranche. This indicates that its reserves were all but depleted before agreeing to the lifeline.

The company’s cash reserve has been front and centre since 8 January. That day Star warned that it was haemorrhaging money and had burned through AU$107 million in 4Q24. But the first takeover tranche, coupled with Star’s AU$60 million sale of the Star Sydney Event Centre, will keep the company afloat until Bally’s can step in. A shareholder meeting to approve both developments is expected in late June.

However, a familiar line was included again in Star’s report: “There remains material uncertainty regarding the group’s ability to continue as a going concern.” The company has included the line in several of its announcements in recent months. There has already been speculation that multiple capital injections could be needed for the business to ultimately recover.

Property-level highlights

At the property level, the flagship Star Sydney posted net revenue of AU$362.2 million, down 19.5% YoY. EBITDA went from AU$37.4 million for the prior period to an AU$24.6 million loss the following year. Star attributed this to “continued impact from implementation of uplifted controls, casino operation reforms (including mandatory carded play and restrictions on the use of cash), loss of market share and the macro economic environment”.

Mandatory carded play and cash limits were imposed on 19 October 2024, the company said. Star Sydney’s casino licence is suspended through 30 September after failing two separate suitability inquiries. The casino remains under state supervision.

Star Gold Coast, also under supervision and with a licence facing a looming suspension, posted AU$218.2 million in net revenue for the period. That was a decrease of 8.4% YoY, far less than Star Sydney but still impacted for the same reasons, Star said. EBITDA, while positive at AU$18.1 million, was still a 59% drop from the prior period.

Treasury Brisbane posted AU$54.8 million in net revenue for the period, but it was closed on 25 August 2024. Its replacement, Star Brisbane, opened the following month.

Brisbane deal expected to continue

Speaking of Star Brisbane, it appears that the company’s decision to exit the joint venture by selling its 50% stake to partners Chow Tai Fook (CTF) and Far East Consortium (FEC) on 7 March for AU$53 million will in fact go through as announced. Bally’s did not support that exit and had tendered its offer just days after it was announced. The US-based operator had sought to keep all available assets together.

But Star confirmed in its report yesterday that the withdrawal is progressing, with long-form documentation expected by the end of April. The transaction is expected to close by the end of June.

Star’s chief motivation for exiting the just-opened venture was cost savings. By selling out, the company is “released from the parent company guarantee in relation to its 50% share” of the project’s debt facility, which had a drawn balance of AU$1.4 billion as of last month. At least AU$212 million in future equity contributions were also wiped out through the sale. Additionally, Star’s operating fee for the casino was doubled to AU$5 million per month through June 2026.

As part of the deal, Star also consolidated full ownership in both of the hotel towers at Gold Coast from CTF and FEC. The site has development space and plans for three additional towers. CTF and FEC retained development rights for one additional tower but Star can buy those rights for AU$17 million.