Star Entertainment Group Limited (ASX: SGR) shares have dropped 0.93% this morning as the group announced the stand down of 90% of its workforce. Star Entertainment’s casinos in Sydney, Brisbane and the Gold Coast have been shuttered in an effort to prevent the spread of coronavirus.
The Federal, Queensland, and New South Wales Governments have issued COVID-19 related directives requiring the closure of all non-essential businesses. For Star Entertainment’s operations, the impact has been the cessation of gaming activities on Monday 23 March.
Food and beverage, banqueting, and conference facilities were also closed on Monday 23 March. Hotel accommodation services remain open in a reduced capacity and in-room dining services are available for guests.
The shutdown of the casino operations will have a material impact on Star Entertainment’s operations. Management is focused on implementing mitigation strategies to minimise impacts and conserve liquidity. These include materially lowering operating costs and reducing capital expenditure.
Employees stood down
As an immediate measure, Star Entertainment has temporarily stood down over 90% of its approximately 9,000 employees. The stand downs include senior management. Star Entertainment has provided employees with 2 weeks paid pandemic leave. Employees will also be able to access accrued annual and long service leave.
The board and senior management will forego a significant percentage of directors fees and salaries. Details will be announced once necessary stand downs across all levels of the business are finalised in coming days.
Previously Star Entertainment, along with Crown Resorts Ltd (ASX: CWN), had been forced to deactivate every second gambling machine and electronic table to create additional distance. The group had reduced capacity at table games and restricted the total number of players at each stand up table game. Numbers at food and beverage, banqueting, conferencing, and theatre facilities had been reduced in line with government restrictions.
As at 24 March, Star Entertainment had available cash or undrawn committed debt facilities of $480 million. It will continue to monitor the developments with COVID-19 and the impacts on Star Entertainment’s business. It is currently unable to advise on the impacts on financial performance due to the uncertain duration of current circumstances.
CEO John O’Neill said, “this is a unique environment and one beyond our control in which we’re determined to balance the necessary measures needed to protect the business while considering the considerable human impact to our workforce.”
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