The Star Entertainment Group Ltd (ASX: SGR) share price is not moving today after the casino operator requested a trading halt this morning.
Star requested the freeze upon receiving the final report undertaken by Adam Bell SC after the 2024 independent inquiry into the casino's operations. The second Bell report was commissioned in February and released today by the NSW Independent Casino Commission (NICC).
In today's release, Star advised it was "considering the report and the implications it may have for disclosures concerning its financial results for FY24". It was also working on finalising its other disclosures relating to the FY24 result and intended to respond to matters regarding its financials.
The trading halt is expected to continue until Star makes an announcement relating to the above-mentioned issues or until trading starts on 2 September 2024.
Still under the microscope
Meanwhile, the NICC said it was considering the next steps for the future of the suspended casino operator. The first Bell Report from 2022 deemed The Star to be unsuitable for a casino licence because of serious regulatory failures. In the report today, it said:
A review of the evidence presented to the Inquiry confirms the assessment made by each of the directors of Star Entertainment that The Star Entities remain presently unsuitable to be concerned in or associated with the management and operation of The Star Casino.
NICC chief commissioner Philip Crawford said today the latest Bell Report has validated the concerns:
The Bell Report reveals a company that had not moved quickly enough to address the governance and cultural concerns raised in the first Bell Report. It has only very recently turned its attention to dealing with challenges that should have been prioritised earlier.
The Bell Report notes that Mr Steve McCann group CEO, Ms Janelle Campbell Sydney CEO and Ms Jeannie Mok group chief operating officer, bring important experience and expertise to the process of engagement with regulators, remediation and cultural transformation which will be vital if the NICC decides that The Star should remain as the operator of The Star Casino.
The level of transparency and cooperation has certainly improved since their appointments.
However, the Bell Report underscores the NICC's concerns that it was not receiving all of the facts from The Star at a time when we needed certainty the company could fund and prioritise an urgent business turnaround.
The NICC said it was unclear whether The Star could "feasibly operate" under less supervision when it was "exhibiting past behaviours with its licence still suspended".
The NICC is "contemplating Mr Bell's findings", including four compliance breaches and will respond in "due course".
While former management has been blamed heavily, the company still has a lot of work to do to fix the business. However, it has not been recommended that The Star be closed.
What is Star doing now?
The company is working on improving its business. According to the Australian Financial Review, it is preparing to announce a $1.4 billion write-down of casino assets and a plan to significantly reduce costs after cashless card gaming and increased regulation.
The AFR reported the ASX share's financial accounts had not been signed by auditors. Star has also been reportedly talking with asset managers like Oaktree Capital Management. Shareholders, including Bruce Mathieson, Perpetual Ltd (ASX: PPT), Wilson Asset Management, and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), were "sounded out" about a possible convertible notes issue to raise as much as $300 million, according to the AFR.
Investors will soon learn what the casino company has decided to do once it announces its plan in the next few days. It seems there is a lot of work operationally and financially to do for the company to continue operating.
Star share price snapshot
As shown on the chart below, the Star share price has fallen around 52% over the past year and more than 80% in three years.
