The Star Entertainment Group Ltd (ASX: SGR) share price is enjoying a rare moment in the green on Monday.
Shares in the embattled casino group hit an all-time low of 10 cents per share in intraday trading on Friday before closing the week at 11 cents.
They have since been volatile in Monday's session, but are currently sitting at 12.7 cents, up 15.45% for the day so far. Of course today's gains pale in comparison to the stock's significant losses over the longer term.
Investors have punished the casino's share price for the last several years now, with recent price action bringing the stock to around its lowest levels on record.
They are down by around 74% this past year, collapsing by more than 30% in the past week alone. The Star share price has also sunk by around 96% over the past five years.
The stock is now holding on for dear life as Star executives scramble to keep the company afloat and at least some of shareholders' wealth in situ. Here's the latest.
Why have Star Casino shares crashed?
Put simply, the casino giant isn't in the best financial shape right now. What's more, Star's cash burn has reached alarming levels.
Just last week, the company reported spending $107 million maintaining its current operations in the three months to December 2024.
Notably, this is more than half of the $200 million lifeline supplied by creditors last year, locked in at a 13.5% per annum interest rate.
Star further advised it expects to be sitting on a cash balance of just $79 million when it reports its half-year results next month, down from $149 million at the end of September 2024.
Regulatory fines, weak trading conditions, implementation of cashless gaming laws, and hefty operational costs are the primary culprits behind this dire situation.
Some analysts now suggest a 50% probability of Star entering administration, which could wipe out holders of Star Casino shares completely.
How did Star end up here?
Investors didn't just wake up one day and decide to sell their Star Casino shares. It is much, much deeper than that.
The troubles stem from a combination of internal and external challenges, most notably the findings of The Bell Two report in August last year, which found Star "unsuitable to hold a Casino licence because of serious regulatory failures".
As part of the review, Star's license to operate The Star Gold Coast was called into question. The Queensland Government has deferred the final decision on this until June this year.
Meanwhile, the company has provisioned $150 million for potential fines from AUSTRAC following breaches of anti-money laundering laws, according to reporting by The Australian.
What's next for Star Casino shares?
Hopes for government intervention appear slim. Both the New South Wales and Queensland Governments have ruled out direct financial support.
Star is also racing to secure additional funds to maintain its business as a going concern.
This includes a $100 million lifeline from its bank, and another $150 million debt facility through broker UBS.
According to separate reporting from The Aus, Star also needs to secure another $1.6 billion to refinance its Queen's Wharf facility in Brisbane.
But with declining financials, it is becoming difficult for Star to meet the conditions to unlock any of these potential funds.
Foolish takeaway
Star Casino shares face an uphill battle as the company struggles with regulatory fines, lightning-fast cash burn, and declining financial performance.
The casino still has to secure multiple tranches of financing to safeguard its future as an operating business.
For now, it's a waiting game to see if Star can pull off a financial miracle.
