Article Published on: January 9, 2025, 10:08h.
Last updated on: January 9, 2025, 10:08h.
Shares of Star Entertainment Group dropped to a record low today due to a liquidity crisis and waning confidence from lenders.
A recent report by Morningstar analyst Angus Hewitt highlighted Star’s decreasing cash reserves, indicating a potential struggle to reach its upcoming interim results without external support.
Star is encountering challenges in fulfilling requirements to access additional capital from its debt facility, with a need for equity to be raised, stated Hewitt.
Amid an ongoing anti-money laundering investigation, Star faces the risk of losing control of its critical venue, The Star Sydney, as macroeconomic conditions add to its precarious situation.
Significant Challenges for Star Entertainment
News of Star’s financial constraints emerged following the sale of a major stake by US banking giant JPMorgan Chase & Co., making the company’s future uncertain.
Hewitt mentioned potential solutions for Star, such as asset sales or finding a buyer, but the immediate focus is on securing funding to address the current predicament.
Critics believe finding a buyer may prove difficult, given the company’s financial state and the challenging economic environment in Australia.
With dwindling cash reserves, Star may explore equity sales to alleviate financial pressure, potentially impacting share value further.
“Star is projected to raise additional equity to address financial needs, with a possible dilutive effect on share prices,” according to Hewitt.
The analyst remains cautious about Star’s future, with a target price set at AUD 0.20.