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Star Entertainment Sells Event Centre to Boost Liquidity

Casino Giant Star Entertainment Offloads Assets— Becomes Top Gainer on ASX

ASX 200 Gains as Star Entertainment Jumps 17.39%

The S&P/ASX 200 rose significantly on Wednesday, boosted by easing inflation data. The Star Entertainment Group Ltd (ASX: SGR) led gains, surging 17.39% to $0.135 after announcing the sale of its Sydney Event Centre.

The embattled casino operator secured a $60 million deal with Foundation Theatres as it battles a liquidity crunch. Investors welcomed the move, pushing the stock 13% higher in early trading. The ASX 200, meanwhile, climbed 0.4%, reflecting investor optimism.

Casino Giant Star Entertainment

Figure 1: The Star Sydney Event Centre (Credit: The Star Sydney)

Star Entertainment’s Cash Crisis Sparks Asset Sales

Star Entertainment has struggled with financial pressure, holding just $79 million in available cash at the end of December. CEO Steve McCann confirmed the company remains focused on selling non-core assets.

We continue to work on a number of other potential non-core asset transactions,” McCann said in a statement.

The Sydney Event Centre, along with additional spaces, will be converted into entertainment venues. Foundation Theatres plans to transform the centre into a 1,550-seat Broadway-style theatre.

Market analyst Grady Wulff at Bell Direct noted that while the sale won’t solve Star’s problems, it represents progress. “While it isn’t enough to revive the company, it is a welcome start on the journey to rebuilding,” Wulff said.

Also Read: ASX 200 Rises as Inflation Data Boosts Investor Optimism

Cerberus Eyes Star’s Debt as Banks Lose Confidence

Reports suggest Cerberus Capital Management is in talks with Star’s creditors to acquire some of the company’s $400 million debt. Barclays, Deutsche Bank, Soul Patts, and Westpac hold the debt but reportedly lack confidence in Star’s turnaround.

The Australian Financial Review revealed that Cerberus has contacted creditors about purchasing Star’s liabilities. The US-based asset manager, which oversees $65 billion in capital, has yet to confirm the reports.

If creditors sell Star’s debt at a discount, it could indicate that banks believe the casino operator may not recover. Star’s financial troubles stem from regulatory probes, executive departures, and casino closures in recent years.

Further Asset Sales on the Horizon?

Star may look to offload more assets to extend its financial runway. The Gold Coast Convention and Exhibition Centre (GCCEC) could be a candidate for sale, as it does not host gaming operations. However, recouping the $167 million spent on the property may be difficult.

Selling gaming venues would pose greater challenges due to government oversight. Since 2022, the Australian government has controlled The Star Sydney, limiting Star’s ability to sell the integrated resort. The company’s Brisbane and Gold Coast casinos also fall under regulatory scrutiny, complicating potential deals.

Star’s Weekly Performance Outshines Monthly and Yearly Declines

Despite Wednesday’s rally, Star Entertainment’s stock remains deep in the red over longer timeframes. The company’s share price has dropped 30.77% in the past month and 74.53% over the past year.

However, the stock has gained 12.50% in the past week, showing a short-term rebound. Star’s market capitalisation now stands at $387.27 million, with 2.87 billion shares issued.

Easing Inflation Lifts ASX 200 as Rate Cuts Loom

The broader market found support from inflation data released by the Australian Bureau of Statistics (ABS). The Consumer Price Index (CPI) rose 0.2% in the December quarter, marking the lowest increase since June 2020.

ABS head of prices statistics Michelle Marquardt commented on the data, stating, “December quarter’s rise was the same as the 0.2% increase in the September 2024 quarter.”

Annual inflation slowed to 2.4% in December, down from 2.8% in September. The trimmed mean inflation, the Reserve Bank of Australia’s (RBA) preferred measure, fell to 3.2% from 3.6%.

ASX 200 investors anticipate that the RBA could cut interest rates sooner than expected. Market analyst Josh Gilbert at eToro noted that a weak Australian dollar complicates the outlook.

“A weak Aussie dollar is cause for concern with a rate cut only set to put downward pressure on the currency,” Gilbert said.

Outlook: Star’s Future Hinges on Debt and Asset Sales

Entertainment faces an uncertain future as it works to raise cash and restructure operations. The company’s stock has seen a short-term surge, but concerns about debt and liquidity remain.

While the $60 million asset sale provides temporary relief, further divestments may be necessary. Investors will closely watch Star’s next moves, as well as potential debt transactions involving Cerberus Capital.

For now, the ASX 200 continues to climb, with inflation cooling and rate cut expectations growing. Star Entertainment’s rally stands out, but its long-term prospects remain uncertain.

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