The Star focuses on compliance following completion of WhiteHawk refinancing

(AsiaGameHub) –   The Star Entertainment Group has fully completed the refinancing of its debt, securing US$390 million (approximately A$540 million) from WhiteHawk Capital Partners.

In response, the Australian casino operator is advancing its remediation plan to satisfy regulatory requirements as part of a broader strategy to enhance compliance and operational efficiency.

The Star remediation plan

The Star has faced significant regulatory scrutiny in recent times, but continues to implement measures aimed at strengthening its compliance framework.

The successful debt refinancing enables The Star to move forward with its remediation initiatives, aligning with directives from the New South Wales Independent Casino Commission (NICC) and the Office of Liquor and Gaming. These include ‘decentralising the group’s operating model to increase accountability and efficiency at individual property levels for business performance’, alongside technology upgrades designed to ‘foster safer gambling practices and ensure continuous, appropriate oversight’.

This development occurs during a critical phase. In March, the NICC renewed the suspension of The Star Sydney’s casino licence, with Nicolas Weeks remaining in charge of operations until 30 September 2026, unless earlier terminated.

The Star stated in a press release: “The reinstatement of The Star Sydney’s casino licence and the Queensland Government’s withdrawal of the deferred suspension on The Star Gold Coast’s casino licence are still subject to ongoing discussions with the relevant regulators; an update is anticipated later this year.”

Additional liquidity for The Star

The operator first established a binding credit facility with WhiteHawk at the end of March. However, as outlined in the latest announcement, the three-year agreement provides for an ‘annual interest rate based on Term SOFR plus a margin, resulting in an interest rate that closely matches those under previous credit facilities’.

Other key terms of the agreement include:

• Quarterly amortisation commencing on 31 March 2027.
• A minimum liquidity covenant of A$50 million for the first 12 months post-financial close, increasing to A$75 million between months 12 and 18, and further rising to A$100 million thereafter.
• A minimum asset coverage ratio of 1.40x, calculated based on the fair market value of secured assets relative to the outstanding principal.
• Based on valuations conducted prior to financing, the company expects it will comply with the coverage ratio, with the initial test scheduled for 31 December 2026.
• Minimum EBITDA covenant effective from 31 March 2027.
• An interest reserve account funded with the first 12 months of interest payments.
• Standard covenants, representations, undertakings, events of default, and review events—including customary financial covenants and reporting obligations.

With the refinancing concluded and the required interest reserve account established under the facility, The Star reports it now holds approximately A$130 million in additional liquidity. This capital will support ongoing operations, cost reduction efforts, and strategic projects.

EBITDA remains negative

Last month, The Star released its third-quarter results for the period ending 31 March 2024, revealing early signs of progress from its cost-cutting actions. While EBITDA improved significantly compared to the same quarter in the prior year, it still reflects a loss.

These improvements stem from several initiatives, including the WhiteHawk refinancing, a binding long-term arrangement with Chow Tai Fook Enterprises Limited and Far East Consortium International Limited concerning the Queen’s Wharf Brisbane and Gold Coast resorts, and organisational streamlining within corporate offices.

These measures follow new leadership after Bally’s Corporation and Investment Holdings completed their A$300 million strategic investment late last year.

The Star commented in its report: “Further initiatives—such as optimising administrative functions across each property and identifying opportunities to reduce indirect costs and supplier expenses—are being pursued to drive long-term financial sustainability and strengthen the group’s overall financial position.”