The Star Entertainment Group has plunged into a serious cash crisis as lenders extend a potential lifeline of AU$150 million, or about $100 million. The company expects the much-needed financial boost to ease its worsening liquidity crisis, driven by overblown costs for its new Brisbane casino and weak customer traffic.
Key Counterparts in the Deal
According to various Australian media reports, the major lenders would include some well-known names such as Oaktree Capital and Cerberus Capital Management. Both of these companies have actively participated in negotiations with the board at Star Entertainment to define the terms of the loan. Additionally, the company plans to increase its existing AU$350 million senior debt facility under the proposal. Completing this deal will require further collateralizing of assets, making the deal a bit hefty.
Demands for Greater Security
Two of the lenders of Star Entertainment, Macquarie and Deutsche Bank, have demonstrated their unease about the assets of the company. The banks want increased security over Star Entertainment’s assets as a cover for themselves. While this might further worsen the negotiations, any agreement reached must undergo rigorous regulatory approvals before taking effect.
Government and Regulatory Cooperation
In an attempt to stabilize its finances, Star Entertainment is seeking the services of its lenders and consulting with the Queensland and New South Wales Governments. The regulator of financial crimes is also a party to the talks-a fact that alludes to how serious the state of the firm’s finances is. The group, however, is still optimistic that it will secure the deal before the close of the week.
Property Sale and Future Plans
Recently, Star Entertainment announced the deal with Griffith University for the sale of its Treasury Building in Brisbane to rake in additional capital. However, it is still very doubtful whether such a sale would recover the full AU$300 million the company needs for short-term funding. This property deal has brought some relief, but it’s for sure a case that the company still has to overcome some hurdles before all gets fully stabilized concerning its financial position.