The future of thousands of jobs and the newly opened Queen’s Wharf precinct in Brisbane are hanging in the balance as casino giant Star Entertainment Group faces a very real possibility of collapse.
The company’s latest financial update has sparked widespread concern among shareholders, with many fearing that the business may not survive beyond February.
Burning Through Cash Reserves
The Star’s cash balance has plummeted by almost half to $79 million in the December 2024 quarter, citing “difficult trading conditions” and a series of costly expenses, including a $15 million fine imposed by the NSW Independent Casino Commission.
This alarming rate of cash burn has led analysts to warn that the company could be facing administration as early as the end of February.
A 50% Chance of Collapse
According to Morningstar analyst Angus Hewitt, there is now a 50% probability that Star Entertainment Group will fall into administration if it continues to burn through its cash reserves at the current rate.
This grim forecast has sparked speculation that the company’s assets, including its Sydney, Brisbane, and Gold Coast operations, could be sold off to try and stay afloat.
The Future of Queen’s Wharf Precinct Uncertain
The Star Entertainment Group opened the doors to the new Queen’s Wharf precinct in Brisbane last year, a $3.6 billion development that features restaurants, bars, and shops.
However, the precinct’s future is now uncertain, with the potential collapse of the company threatening the livelihoods of thousands of workers.
Share Prices Plummet
Star Entertainment Group was the worst-performing business on the ASX last week, shedding 15.39% on Friday after a 33.3% drop on Thursday.
The company’s share price has been in freefall, sparking concerns among investors and leaving many wondering if the business can be saved.
A Difficult Road Ahead
Star Entertainment Group’s chief executive, Steve McCann, has acknowledged that the company faces a “difficult road ahead” and is in an “extremely challenging position”.
McCann has pledged to work with stakeholders to try and deliver a viable outcome for the business, with the focus on saving jobs and providing a sustainable future for the company’s 9,000 employees.
Government Support Unlikely
The Queensland Labor government had previously been in talks with Star Entertainment Group to provide financial support, but these discussions fell through after the government was ousted in the October state election.
The current government has stated that its primary focus is on protecting the thousands of jobs at the Gold Coast and Queen’s Wharf, rather than propping up the company’s boardroom.