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Morningstar analyst Angus Hewitt told clients the cash burn rate meant Star "would be lucky to make it" to its February profit results "without a lifeline". (ABC News: Mark Leonardi)
It's a sweaty Brisbane Monday and Please Don't Go by KC and the Sunshine Band is playing in the largely empty gaming floor of the Queen's Wharf Casino.
The sappy muzak chorus — "I'm begging you to stay" — is ironically symbolic of the problems befalling the casino's manager, The Star Entertainment Group.
Not enough people are staying at Star's casinos and gambling money, such as on slot machines with fortuitous-sounding names like Where's the Gold.
Most of the tables were fairly empty this afternoon, albeit it was a Monday.
The Star is burning through cash: $107 million in the past three months alone. (Supplied: Star Entertainment Group)
One group, at least, crowded across the purple felt of a baccarat table.
This lack of customers partly means Star is burning through cash: $107 million in the past three months alone.
Morningstar analyst Angus Hewitt told clients the cash burn rate meant Star "would be lucky to make it" to its February profit results "without a lifeline".
"We now incorporate a 50 per cent probability that Star falls into administration," he wrote.
Insolvency for Star would be a massive corporate event and potentially throw up hurdles, sources with knowledge of the gaming and insolvency industries told the ABC.
Shareholders would be wiped out in an administration.
But most sources expected administrators would try and keep Star's three casinos in Sydney, the Gold Coast and Brisbane open.
In one scenario, only the head company — Star's listed share market entity — would go into administration and not the actual casino operations.
The Star Casino at Broadbeach has more 70 table games and 1,400 machines (ABC Gold Coast: Kimberley Bernard)
The head entity's administrators could then potentially look at selling its assets, such as its shares in subsidiaries operating casinos in Sydney and the Gold Coast.
The group also could sell some Gold Coast real estate assets.
Billionaire pub baron Bruce Mathieson, whose family owns 9.9 per cent of the shareholder-listed entity, is often touted as a potential purchaser of casino assets on the Gold Coast, and private equity giant Blackstone of Star's Sydney casino.
The trickier task is Brisbane's casino.
Star owns 50 per cent of a joint venture with a Chinese-backed consortium, which has the casino licence and then outsources the Brisbane management back to Star.
Brisbane's $3.8 billion Queen's Wharf precinct throws open its doors to the public today.
Some sources believed the Chinese consortium had a first right of refusal to any sale of Star's consortium stake, creating a hurdle.
And if the Chinese interests bought out Star's stake, then there was debate over whether they would let Star keep its operations of the Brisbane casino.
Also potentially in the balance are the jobs of the 8,000 people employed by Star.
Brisbane local Gerry Crooks, speaking in the shadow of the casino on its new bridge on Monday, told the ABC he felt for employees who started only months ago and "now it's all thrown up in the air".
The Queen's Wharf precint opened in Brisbane in August 2024. (ABC News: Mark Leonardi)
But he did not want the taxpayer to fork out to save them.
"Private enterprise should take it over. It's not a government issue, but I think your private enterprises won't do it."
Premier David Crisafulli maintained in the last few days that our "whole focus is on making sure that that operation continues in whatever capacity … to make sure that those workers can get out of bed on a morning, go to work".
But the government will not clarify how it will support staff.
David Crisafulli says his focus has been on the jobs for staff in Brisbane. (AAP: Jono Searle)
Administrators — and potentially receivers if lenders appoint their own insolvency specialists — would assess the feasibility of retaining staff if operations are losing money.
And some insolvency sources thought the prospect of the government offering direct cash for Star wages was extremely unlikely, given other companies go under without such support.
"That's a precedent for next time," one insolvency source warned.
Star could still pull back from travesty.
Options include the company being able to raise additional capital from investors willing to risk stumping up cash.
Star's share price has tumbled from above the $5 mark in 2018 to close at 12c on Monday, reflecting fleeing investor appetite for the business.
Still, some are willing to step in — a new shareholder notice on Monday showed Macau-based Xingchun Wang had acquired a 5.5 per cent stake in Star after buying $35 million in shares since September last year.
Star Entertainment has once again defied the odds after being allowed to keep its gaming room doors open by the NSW regulator on the condition it gets its house in order — but the future of the company remains as uncertain as ever.
Its key lenders could also offer another $100 million if conditions are met, including the group being able to raise $150 million and lenders backing its long-term forecasts.
But if administrators arrive, insolvency industry sources said another crucial issue will be retaining goodwill and ensuring punters keep coming.
In that aspect, Star has some welded-on customers, such as one who came out of the casino having lost $100 on Monday.
"It's alright," the gambler said of the facility.
But he thought it was losing players and complained about some aspects, such as roulette-ball sizes and tighter regulations.
Still, he didn't want his name published: he was worried about being blacklisted and prevented from coming back.
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