The company’s shares plunged by 7 per cent this morning following the announcement in which it said it would also ask the two State Governments for flexibility in the payments casino duty rates and fines imposed on it over widespread breaches in its money laundering conditions.
It has also brought in Barrenjoey to do a strategic review which would “consider any structural alternatives available to maximise value for the group’s shareholders”.
The company, which operates casinos in Sydney, the Gold Coast and Brisbane is also a joint venture partners in the $3 billion Queens Wharf development in Brisbane’s CBD.
Following two inquiries, Star was fined $100 million by the Queensland Government over the breaches of its licences. A special manager was appointed by both governments to oversee its reforms.
At the time the Government imposed the fines it said it had taken into account the impact on the thousands of workers at the casinos.
“The group is experiencing a significant and rapid deterioration in operating conditions, particularly at The Star Sydney and the The Star Gold Coast,” it said in a trading update.
“This has largely been driven by the compounding impact of regulatory operating restrictions and exclusions and by an emerging weakness in consumer discretionary spending.
“The strong first half performance of the group’s Queensland properties as reported in February, which was driven by strong domestic revenues in that period, has deteriorated in recent weeks, particularly at the Gold Coast.
“If these current conditions continue for the balance of the financial year and do not materially change, underlying full year 2023 EBITDA is expected to be in the order of $280 million to $310 million.”
That excludes the provisions for fines and the costs of ongoing regulatory reviews. Its previous guidance of $330 million to $360 million.
The company would reduce staffing by about 500 fulltime equivalent positions, cancel short term incentives and freeze salaries for all employees outside those on an enterprise bargaining agreement.
“These actions, together with the previously announced $40 million of operational initiatives, are expected to deliver a combined ongoing reduction in group operating expenditure of more than $100 million, annualised, compared with full year 2023.