Star Entertainment, the beleaguered Australian casino operator, is liquidating assets to generate cash, while at least one money manager considers purchasing the company’s debt.
In a Wednesday filing with the Australian Securities Exchange (ASX), Star announced the sale of The Star Sydney Event Centre and related assets to Foundation Theatres for AU$60 million ($37.5 million). This move could buy Star some time to stave off insolvency. Earlier this month, Morningstar analyst Angus Hewitt warned that at its current cash burn rate, the casino operator might become insolvent before its February financial results.
Star CEO McCann stated in the regulatory filing, “The Star has worked closely with Foundation Theatres since they acquired the Sydney Lyric sublease in 2011. We are pleased to partner with them as part of the continued evolution of our broad entertainment offerings at The Star Sydney.”
McCann also mentioned that the company is working on other “noncore” transactions, though he didn’t specify details.
Cerberus Eyes Star Debt
News of the Sydney event center sale broke just a day after reports emerged that Cerberus Capital Management is in talks with Star lenders about acquiring some of the AU$400 million debt owed by the gaming company.
Sources suggest that creditors—including Barclays, Deutsche Bank, Soul Pattts, and Westpac—lack confidence in Star’s ability to recover, and doubt that asset sales will suffice to keep the company afloat. These creditors might be willing to sell the debt at a steep discount before it becomes worthless.
The Australian Financial Review reported that New York-based Cerberus Capital has been approaching these creditors about buying Star’s liabilities, though the asset manager hasn’t publicly confirmed these efforts.
Cerberus is an alternative asset manager with $65 billion in capital under management, spanning credit, private equity, and real estate. The company operates two offices in Sydney.
Future Asset Sales for Star
Among the noncore assets that Star could sell to raise cash is the Gold Coast Convention and Exhibition Centre (GCCEC) in Broadbeach, as it’s not a gaming venue. However, recovering the AU$167 million spent to build the property could be challenging, since prospective buyers might have leverage over the seller.
Selling gaming venues, which Star has not yet committed to, could be even tougher. The Star Sydney has been operated by the Australian government since 2022, and Star risks losing full control over the integrated resort.
Similarly, The Star Brisbane and The Star Gold Coast are also managed by the government, presenting potential regulatory hurdles that could deter potential buyers.
