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An mystery investor from Macau has lifted his stake in embattled casino operator The Star Entertainment Group (ASX: SGR) after making an additional $3.16 million plunge in the past 24 hours, taking his holding to 6.52 per cent.
The investor, Xingchun Wang, picked up 28.7 million shares at 11c each yesterday, adding to his existing investment in the group which previously stood at 5.52 per cent.
Wang who first entered the company’s share register in September last year, became a substantial holder last week and with yesterday’s share buy-up has acquired more than 39.5 million shares since Christmas Eve.
The latest purchase pushes his interest in The Star to about 187 million shares which are valued at more than $26 million based on the current share price of 14c.
Wang has paid as much as 25.9c per share for The Star and yesterday took advantage of the share price hitting a record low of 10c.
Wang’s investment in The Star since October has cost him more than $38 million, implying the Macau investor is sitting on an unrealised capital loss of $12 million.
Wang is not the only investor taking a punt on The Star despite a looming cash crisis.
JPMorgan Chase has also upped its stake in The Star from 5.05 per cent to 6.34 per cent following a bargain-hunting spree at the end of last week.
However, the investment by Wang this week has positioned him among The Star’s biggest shareholders at a time when the market is speculating about the financial viability of the casino group.
Under the company’s constitution, and in line with agreements with casino regulators, no individual can have a voting power of more than 10 per cent in The Star.
Speculation about the future of The Star was heightened last week when the company revealed that it had burned through a net $70 million in cash in the three months to the end of December, leaving the group with just $79 million in the bank.
The company said it was also facing challenges to secure the second tranche of a new $200 million debt facility negotiated with its lenders late last year. However, the group noted that it was pursuing “other liquidity solutions” in order to stay afloat.
Some analysts have raised possibility that The Star’s financial woes could push the company into administration. Such a move could potentially leave investors such as Wang high and dry, sitting on massive losses.
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