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Cash-strapped casino operator The Star Entertainment Group (ASX: SGR) has struck an agreement with lenders for a new $200 million debt facility in a temporary relief plan that eases some financial pressure looming at the end of this month for the company.
The debt deal – which is subject to several new conditions by corporate lenders - has been announced ahead of the delayed release by The Star of its annual earnings results which the company expects to announce later today.
Under the debt agreement struck with its lenders, The Star’s existing $450 million debt facility has been slashed to $334 million which the company says is now fully drawn.
The lenders also have agreed to provide covenant waivers for the next two “testing dates” for the company’s existing debt.
These are 30 September 2024 and 31 December 2024, with the December waiver subject to the execution of long-form documentation for the new debt facility.
The Star’s new debt facility will be delivered in two tranches of $100 million each, with funds from the first tranche expected to be ready for drawdown by the end of October.
However, the first $100 million is subject to The Star providing unsecured guarantees from some of its regulated entities and enhanced security to lenders – which are also subject to regulatory consent.
The lenders also want The Star to set up a “disposal proceeds account” that will be credited with the net proceeds of the $67.5 million sale of the lease on the Treasury Brisbane casino building to Griffith University which was announced on 6 September 2024. The Star is expected to receive a net $60.7 million from the deal.
The second $100 million tranche is subject to more onerous conditions, with these funds set for drawdown by the end of December.
The conditions include The Star successfully raising additional capital of at least $150 million.
The lenders are only willing to forward the additional funds if they also approve of The Star’s strategic plan and long-term financial forecasts, on top of regulatory consents being granted to lenders for security over the regulated entities within the group.
The Star says the all-in coupon for the new facility is 13.5 per cent per annum with the company’s existing $300 million term facility repriced to this level.
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