Star Entertainment reverses course a day after Sydney casino relief By Reuters

By Rishav Chatterjee

(Reuters) – Troubled Australian casino operator Star Entertainment reversed course on Friday and fell as trading resumed a day after the New South Wales gaming regulator announced the troubled company would keep its Sydney casino open could hold.

The New South Wales Independent Casino Commission decided on Thursday not to revoke the company’s license to operate in Sydney, instead allowing it to continue with a small fine of A$15 million (US$10.04 million).

The company’s shares, which rose as much as 5.2% to A$0.305 in early trading, reversed and fell 3.5% to A$0.28.

The debt-laden gambling company finds itself in the eye of a perfect storm that has plagued Australian casino operators for years, with larger rival Crown Resorts, owned by Star and Blackstone, facing multiple regulatory inquiries amid subdued tourist visits and lengthy closures.

“Star has yet to demonstrate its suitability to operate its casinos, faces a significant fine from AUSTRAC and the recovery of profits is highly uncertain,” said Morningstar equity analyst Angus Hewitt.

The changes called for by Philip Crawford, the Independent Casino Commissioner, will require the company to reshuffle its board and provide periodic financial updates while being under the control of a government-appointed manager until at least the end of March.

More recently, Star’s board and management team faced two Bell inquiries, lost its CEO and chairman, and nearly went bankrupt. However, last month the company secured up to A$200 million ($133.92 million) in debt protection to modernize its operations.

The state of New South Wales launched its first investigation into Star two years ago and found the company had misled its bankers and regulators. A subsequent investigation by Adam Bell, SC, found that the company’s relationship between the board and several stakeholders was deteriorating.

($1 = 1.4934 Australian dollars)