It's been a mildly disappointing start to the week for the S&P/ASX 200 Index (ASX: XJO) and most ASX 200 shares so far this Monday. At the time of writing, the ASX 200 has slid 0.24% lower and is just over 8,070 points. But let's talk about what's going on with the Star Entertainment Group Ltd (ASX: SGR) share price.
The ASX 200's rough start to the week pales in comparison to what appears to be unfolding with Star shares.
As we covered last Friday, the gaming and casino company's shares are frozen at the 45 cents they closed at last week when Star announced it had sought a trading halt from the ASX.
The trading halt request came after the company received the final report from Adam Bell SC from the independent inquiry into its casino operations, which was released by the New South Wales Independent Casino Commission (NICC).
As my Fool colleague reported, NICC chief commissioner Philip Crawford stated that Star's conduct still raised 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….
He also included the line "if the NICC decides that The Star should remain as the operator of The Star Casino".
To add to its woes, Star has failed to report its full-year earnings, which were scheduled for last Friday. As a result, the ASX slapped Star shares with a trading suspension today, which has continued the company's trading halt from last Friday
However, investors' worries might be beginning to run deeper than these regulatory difficulties. Shareholders are now reportedly concerned about that most fundamental question of any business: Does it have enough cash to survive?
So, is Star heading for bankruptcy?
Is Star Entertainment on the brink of ASX bankruptcy?
According to reporting from the Australia Financial Review (AFR) today, Star has "spent the weekend in talks with … three stakeholder groups – investors, lenders and governments/regulators – about a capital injection".
Cash at the casino operator is reportedly "dwindling as core casino takings go backwards and compliance costs rise". Unfortunately for Star Entertainment, its options are looking limited after it already undertook a large capital-raising program from shareholders last year.
Today, the Star Entertainment share price is a third lower than when it issued those new shares in September 2023.
A separate AFR report today claims that Star Entertainment was not able to strike a deal over the weekend with any lenders, investors or governments. That was despite a request to the NSW and Queensland governments for tax relief.
That report also suggests that Star was considering raising capital through the issuance of convertible notes (loans that convert into shares later).
So that's all we know (or can speculate) right now. It's arguably not a great time for this embattled casino operator. But only time will tell if Star can secure some near-term funding to stave off its financial woes.
