The Star reaches ‘safe harbour’ amid existential crisis: what next?

Sankunni K January 19, 2025

SiGMA news

The Star Entertainment Group, once a titan in the Australian casino industry, has reached a critical juncture as it enters a ‘safe harbour’ to protect executive decisions amid an existential crisis. The company, which operates casinos in Sydney, the Gold Coast, and Brisbane, is now facing severe financial challenges, regulatory scrutiny, and a potential collapse.

The crisis unfolds

The troubles for The Star began in October 2021 when reports emerged of the company enabling suspected money laundering, organised crime, and fraud at its casinos. Regulatory inquiries followed, finding The Star unsuitable to operate its Sydney and Queensland casinos, leading to government supervision. The company has since churned through key personnel, including two CEOs, and burned through significant cash reserves.

Financial strain

Despite raising over A$2 billion in equity and debt since early 2023, The Star warned last week that it had just A$79 million left in its coffers. Analysts have expressed concerns that the company may not survive beyond February without a lifeline. Morgans Financial analyst Leo Partridge that voluntary administration and a shareholder wipeout remain a “high likelihood”.

Regulatory and compliance costs

The Star’s financial woes have been exacerbated by the high costs of overdue compliance, financial controls, and regulatory fines. The company has been overwhelmed by the expense of meeting remediation and cultural uplift obligations, which are critical to its sustainable future. CEO Steve McCann (depicted in the featured image) stated, “We are continuing to explore all viable options to strengthen our financial position and engage with our key stakeholders to ensure the long-term viability of our business”.

Impact on employees and stakeholders

The crisis has left over 8,000 workers nationwide worried about their jobs. The United Workers Union Deputy Director Andrew Jones expressed concern, saying, “These members have been through a long period of uncertainty at Star”. The Queensland government has yet to confirm if it will step in to support the company, while the NSW government has ruled out further assistance, according to .

The mystery investor: Wang Xing Chun

Adding to the complexity of The Star’s situation is the emergence of Wang Xing Chun, a mystery investor from Macau. Wang has quietly acquired a 5.5 percent stake in The Star Entertainment Group, making him one of the company’s largest shareholders. His investment, worth around AU$19.8 million, was made through multiple transactions since September 2024. Wang’s shares are registered to a Macau address, and he shares a name with a Macau businessman connected to a Hong Kong-listed coal group.

Wang’s intentions remain unclear, but his involvement has raised eyebrows given The Star’s ongoing regulatory issues and financial instability. Morningstar analyst noted, “At the current cash burn, the company would be lucky to make it to its interim results on February 28 without a lifeline”. The acquisition of Wang’s stake comes at a time when The Star is rapidly burning through its cash reserves, despite having recently drawn down AU$100 million from a new debt facility.

What lies ahead for The Star

As The Star navigates this precarious situation, the company’s future remains uncertain. Analysts suggest that selling assets like hotels and carparks could provide some relief, but the path to recovery is fraught with challenges. The Star’s failure would mark the end of an era for Australian casino operators, which have faced increasing scrutiny and regulatory crackdowns in recent years.