Star Entertainment Group says it has reduced its monthly operating expenses to just AU$10 million and estimated six-month cash requirements to AU$320 million following implementation of a series of initiatives aimed at navigating the COVID-19 pandemic.
On the same day as domestic rival Crown Resorts announced it had secured more than AU$1 billion in additional debt facilities as part of its own survival strategy, Star revealed it currently has around AU$700 million in available cash and undrawn debt facilities, including an additional debt funding facility with existing relationship banks for AU$200 million.
That AU$700 million provides “sufficient liquidity for an extended period of shutdown of the Group’s properties,” Star said, citing estimated cash requirements of AU$220 million under a three-month shutdown to 30 June 2020, or AU$320 million under a six-month shutdown to 30 September 2020.
The requirements take into account operating expenses, draw down by employees on accrued annual and long service leave entitlements, payables offset by receivables, interest payments and capital expenditure payments including joint venture contributions.
Star also revealed that is has secured agreement from all of its debt providers for a full waiver of its gearing and interest cover covenants at the next covenant testing date of 30 June 2020.
“The Star is implementing necessary and wide-ranging measures to strengthen the balance sheet and preserve liquidity in the current exceptional circumstances,” said Managing Director and CEO Matt Bekier.
“The shutdown continues to have a significant impact on our people and their families, and the Group welcomes the Australian Government’s support, particularly the JobKeeper Payment program.
“Our focus remains on preserving the Group’s solid financial position and operating flexibility to resume operations quickly when the current COVID-19 restrictions begin to lift.”
Star said it has applied to access the government’s JobKeeper Payment program which would see the Group granted a wage subsidy of AU$1,500 per fortnight per eligible employee.