Star Entertainment confirmed that it had received “inbound” interest from several parties regarding possible investments in the group. This included a consortium consisting of a Hard Rock International regional entity.
Early today, 20 May, reports surfaced that Hard Rock is part of an investment group looking to buy Star. The Australian Financial Review broke the news, and it was also reported elsewhere.
According to reports, all Star casinos will be rebranded under the Hard Rock brand. Each site will also become less dependent on casino revenues and more focused on aspects like live music and hotel.
Star’s shares in Sydney, Australia, initially rose by more than 21,0% after the announcement was made just before noon local time. The shares are trading at a 19.5% premium to today’s open price.
Star responded by saying that it received an “inbound” interest from a number of external parties regarding potential transactions. The company added that this is an unsolicited interest, which is preliminary, non-binding and not a result of contacting them.
Star acknowledges Hard Rock’s interest
It responded again, mentioning Hard Rock. Star confirmed that it did not receive a direct proposal from Hard Rock but had received interest from other parties. One consortium included the Hard Rock Hotels & Resorts Pacific Regional Division of Hard Rock.
Star reported that “the company received interest in potential transactions from a variety of external parties, including a group of investors that includes Hard Rock Hotels & Resorts Pacific,” which Star believes is a Hard Rock local partner.
The interest expressed to date is confidential, uninvited, preliminari and non-binding. As of this point, no substantive discussion has taken place.
Star remains focused on remediation efforts in New South Wales, Queensland, and Bell Two Inquiry. Star will inform its shareholders in compliance with its ongoing disclosure obligations.
Star’s trials and tribulations
Star is facing a period of uncertainty. The group is currently the target of a new inquiry into its operations.
Star, in response to media reports on the Bell investigation’s second phase, launched the inquiry in February. The focus of this article is on Star’s operations in New South Wales and the fallout from the Bell Report.
A report on Star Sydney, one year after the initial inquiry was completed, found that the casino had taken 22 out of the 30 recommendations from the Bell Report.
Star’s culture is also a key focus. The inquiry will also examine the culture of risk management, as well as Star’s reporting and management lines. The inquiry also examines whether Star was able to secure the necessary financial resources to maintain The Star Casino.
Queensland license suspension extended
Star could also face regulatory action in Queensland. Star received a sanction in Queensland in December 2022 for a number of failures. The group was fined AU$100.0m (PS52.8m/EUR61.6m/US$67.1m) and informed its licence would be suspended.
The decision was made after an investigation of the operations at Star Gold Coast, and Treasury Brisbane. Star Gold Coast and Treasury Brisbane were found to be “unsuitable”.
Star has been accused of a “consistent effort” in misleading banks and regulators about the true purpose of China UnionPay. Star encouraged people linked to criminal organizations to gamble.
Also, there are issues with social responsibility and ineffectiveness of anti-money laundering practices and fighting terrorism funding. Concerns were also raised about past dealings with junket operators.
Star had initially been given 12 months in which to fix the issues raised by investigators, and demonstrate that it met all requirements for a license. Star’s initial deadline of 1 December 2023 was moved to 31 May after it submitted a remediation plan.
This deadline was again extended last week to the 20th of December. The authorities in Queensland wanted to wait until the Bell Inquiry was completed before deciding on Star’s license.
What is happening at Star now?
Star also lost several key staff members in the last few months due to regulatory uncertainties.
Robbie Cooke was the group’s CEO and managing director. His departure, confirmed in March, is one of them. Christina Katsibouba, chief financial officer is leaving the company as well.
Jessica Mellor will step down from her position as CEO at Star Gold Coast, and David Foster takes over as the executive chairman. Foster took on extra duties after Cooke stepped down as CEO.
Star also released a Q3 trading update last month, which showed a loss net of $6.8m. It was still an improvement over the loss of $49.7m in the Q3 last year.
The Q3 revenues were also down by 4.6%, to EUR419.2m. Normalised EBITDA was down 11.5% at $37.9m.
Hard Rock making moves
Hard Rock has experienced some movement over the past few weeks and months.
Hard Rock Digital, its B2C-focused business unit in the US, has struck a deal with 888 to purchase certain B2C assets.
Hard Rock has not disclosed which assets it will be purchasing. The sale is expected to be completed in stages by the end of Q4 2018. The agreement to sell came only weeks after the launch of 888’s strategic review.
Hard Rock announced last week that it would close The Mirage Hotel and Casino for renovations on the 17th of July. The group plans to build a new resort that will feature a 700ft-high version of the iconic guitar-shaped tower.
Hotel occupancy will end on 14th July at this iconic Las Vegas location. All hotel and show bookings made after this date are automatically cancelled.
Hard Rock acquired the property by 2022. The complex, owned by Florida’s Seminole Tribe, is the first to be operated on the Strip by a tribal group.
