Star Entertainment Group Limited · ASX:SGR
Star Entertainment — The Star Entertainment Group — Investor Presentation (February 2023)
57 slides from Star Entertainment's investor presentation, Feb 23, 2023
Slide 1: Capital Structure Initiatives and Equity Raising
For personal use only THE STAR ENTERTAINMENT GROUP CAPITAL STRUCTURE INITIATIVES AND EQUITY RAISING INVESTOR PRESENTATION 23 FEBRUARY 2023 Robbie Cooke Chief Executive Officer Christina Katsibouba Chief Financial Officer NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 1
Slide 2: Important Notice and Disclaimers (1 of 5)
IMPORTANT NOTICE AND DISCLAIMERS (1 OF 5) Important notice and disclaimer The following Important Notice and Disclaimer applies to this investor presentation (Presentation) and you are therefore advised to read this carefully before reading or making any other use of this Presentation or any informa
Slide 3: Important Notice and Disclaimers (2 of 5)
IMPORTANT NOTICE AND DISCLAIMERS (2 OF 5) Those non-IFRS financial information/non-GAAP financial measures do not have a standardised meaning prescribed by AAS or IFRS. Therefore, the non-IFRS financial information/non-GAAP financial measures may not be comparable to similarly titled measures presen
Slide 4: Important Notice and Disclaimers (3 of 5)
IMPORTANT NOTICE AND DISCLAIMERS (3 OF 5) Refer to the ‘Foreign selling restrictions’ on slides 54 to 56 of this Presentation for more information. The release, publication or distribution of this Presentation (including an electronic copy) outside Australia or New Zealand may be restricted by law.
Slide 5: Important Notice and Disclaimers (4 of 5)
IMPORTANT NOTICE AND DISCLAIMERS (4 OF 5) The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include trading, financing, corporate advisory, financial advisory, investment management, investment research, principal invest
Slide 6: Important Notice and Disclaimers (5 of 5)
IMPORTANT NOTICE AND DISCLAIMERS (5 OF 5) General In this Presentation references to ‘The Star’, ‘The Star Group’, ‘the Group’, ‘we’, ‘us’ and ‘our’ are to The Star Entertainment Group Limited and (where applicable) its controlled subsidiaries and entities. Statements made in this Presentation are m
Slide 7: Contents
CONTENTS For personal use only 1. CAPITAL STRUCTURE INITIATIVES 2. STRATEGIC PRIORITIES AND INVESTMENT THEMES 3. FUNDING AND CAPITAL MANAGEMENT 4. EQUITY RAISING DETAILS 5. SUMMARY OF KEY RISKS APPENDICES 7
Slide 8: Overview
OVERVIEW Today, The Star announces an $800 million equity raising The Star also announces it has secured covenant relief through to June 2025 For personal use only CAPITAL STRUCTURE INITIATIVES Equity Raising Covenant Relief ♦ $800m equity raising (Equity Raising): ♦ Covenant relief secured from bot
Slide 9: Strengthened Balance Sheet
STRENGTHENED BALANCE SHEET Pro forma as at 31 December 2022 For personal use only ✓ ✓ ✓ $341m 0.8x $754m Pro forma Pro forma Pro forma Net Debt1 Net Debt / EBITDA2 Liquidity3 Reduction of $770m Reduction of 1.9x Increase of $200m (from $1,111m) (from 2.7x) (from $554m) CAPITAL STRUCTURE INITIATIVES
Slide 10: Looking Ahead
LOOKING AHEAD Strengthened balance sheet provides a platform for The Star to continue to deliver on its key strategic priorities For personal use only Pathway to suitability Further capital Operational structure initiatives enhancements Continued urgent focus Strengthened balance sheet The Star inte
Slide 11: Contents
CONTENTS For personal use only 1. CAPITAL STRUCTURE INITIATIVES 2. STRATEGIC PRIORITIES AND INVESTMENT THEMES 3. FUNDING AND CAPITAL MANAGEMENT 4. EQUITY RAISING DETAILS 5. SUMMARY OF KEY RISKS APPENDICES 11
Slide 12: New Leadership, Clear Strategic Priorities
NEW LEADERSHIP, CLEAR STRATEGIC PRIORITIES For personal use only Comprehensive and urgent focus on remediation actions to align with the requirements of our regulators, return to suitability and regain trust Explore portfolio optimisation strategies to further optimise our capital structure and unlo
Slide 13: Attractive Portfolio with Growth Potential
ATTRACTIVE PORTFOLIO WITH GROWTH POTENTIAL QWB to replace Treasury Brisbane once open For personal use only 1 Leading locations ♦ Three properties in large catchment areas (Queen’s Wharf Brisbane to replace Treasury Brisbane once open) ♦ Positioned in Australia’s first and third largest population c
Slide 14: Portfolio of Premium Properties
PORTFOLIO OF PREMIUM PROPERTIES QWB to replace Treasury Brisbane once open The Star Sydney The Star Gold Coast1,2 Queen’s Wharf Brisbane2 Treasury Brisbane For personal use only Year opened ♦ 1997 ♦ 1985 ♦ Dec 2023 phased opening3 ♦ 1995 ♦ 99 years ♦ Perpetual licence ♦ 99 years from opening ♦ Expir
Slide 15: The Star Sydney
THE STAR SYDNEY SYDNEY’S LARGEST AND MOST DIVERSIFIED CASINO For personal use only ♦ Largest casino in NSW and second largest casino in Australia with prime location in Pyrmont Bay: • Signature gaming with 1,500 EGMs and 300+ tables • 650 hotel rooms and 36 F&B outlets ♦ Only casino operator of EGMs
Slide 16: Gold Coast
GOLD COAST TOWER 1 OPEN, TOWER 2 OPENING 2024 For personal use only ♦ The Star Gold Coast has undergone significant transformation as masterplan delivery continues1 ♦ Strong performance, driven by local customers and domestic tourism, will be enhanced when international tourism returns ♦ The Dorsett
Slide 17: Queen's Wharf Brisbane
QUEEN’S WHARF BRISBANE PHASED OPENING FROM DECEMBER 20231 For personal use only ♦ The Star is 50% owner and sole operator of Queen’s Wharf Brisbane – a transformative development for Brisbane, offering an integrated resort within the CBD ♦ Queen’s Wharf Brisbane phased opening from December 2023. Fu
Slide 18: Contents
CONTENTS For personal use only 1. CAPITAL STRUCTURE INITIATIVES 2. STRATEGIC PRIORITIES AND INVESTMENT THEMES 3. FUNDING AND CAPITAL MANAGEMENT 4. EQUITY RAISING DETAILS 5. SUMMARY OF KEY RISKS APPENDICES 18
Slide 19: Equity Raising Reduces Debt, Increases Liquidity
EQUITY RAISING REDUCES DEBT, INCREASES LIQUIDITY AND PROVIDES A PLATFORM FOR REFINANCING INITIATIVES For personal use only OVERVIEW PRO FORMA DEBT MATURITY PROFILE ($M)4 USPP ♦ Covenant relief secured from both Drawn bank facilities bank lenders and USPP noteholders Undrawn bank facilities 539 throu
Slide 20: Increased Liquidity
INCREASED LIQUIDITY Net proceeds from the Equity Raising will be used to repay debt and increase liquidity – providing The Star with enhanced financial flexibility to help navigate a range of operating and regulatory For personal use only uncertainties PRO FORMA LIQUIDITY ($M)1 Total Facilities Less
Slide 21: Contents
CONTENTS For personal use only 1. CAPITAL STRUCTURE INITIATIVES 2. STRATEGIC PRIORITIES AND INVESTMENT THEMES 3. FUNDING AND CAPITAL MANAGEMENT 4. EQUITY RAISING DETAILS 5. SUMMARY OF KEY RISKS APPENDICES 21
Slide 22: Sources and Uses of Funds
SOURCES AND USES OF FUNDS Net proceeds from the Equity Raising will be used to repay debt and increase liquidity – providing For personal use only The Star with enhanced financial flexibility to help navigate a range of operating and regulatory uncertainties Sources of funds Entitlement Offer ~$685m
Slide 23: Equity Raising Details
EQUITY RAISING DETAILS ♦ $800 million Equity Raising comprised of: Offer Structure • a 3 for 5 pro rata accelerated non-renounceable entitlement offer (Entitlement Offer) to existing eligible For personal use only and Size shareholders to raise ~$685 million; and • an institutional placement (Placem
Slide 24: Equity Raising Timetable
EQUITY RAISING TIMETABLE For personal use only Events Dates Announcement of Equity Raising Thursday, 23 February Placement and Institutional Entitlement Offer bookbuild Thursday, 23 February Announcement of results of the Placement and Institutional Entitlement Offer Friday, 24 February The Star sha
Slide 25: Contents
CONTENTS For personal use only 1. CAPITAL STRUCTURE INITIATIVES 2. STRATEGIC PRIORITIES AND INVESTMENT THEMES 3. FUNDING AND CAPITAL MANAGEMENT 4. EQUITY RAISING DETAILS 5. SUMMARY OF KEY RISKS APPENDICES 25
Slide 26: Summary of Key Risks
SUMMARY OF KEY RISKS The following is a high-level summary of certain key risks that may impact The Star. Investors should consider the key risks in the appendices in their entirety before making an investment decision ♦ Casino licence in NSW suspended, and casino licences in Queensland suspended on
Slide 27: Contents
CONTENTS For personal use only 1. CAPITAL STRUCTURE INITIATIVES 2. STRATEGIC PRIORITIES AND INVESTMENT THEMES 3. FUNDING AND CAPITAL MANAGEMENT 4. EQUITY RAISING DETAILS 5. SUMMARY OF KEY RISKS APPENDICES 27
Slide 28: Pro Forma Indebtedness as at December 2022
PRO FORMA INDEBTEDNESS AS AT 31 DECEMBER 2022 Equity Estimated Repayment and Net Cash 31 Dec 2022 $m 31 Dec 2022 Raising Transaction Cancellation For personal use only Proceeds1 (pro forma) Proceeds Costs of Debt DEBT Drawn bank facilities 685 (248) (290) 147 USPP notes 583 (232) - 351 Total debt 1,
Slide 29: Key Risks
KEY RISKS The Star’s financial position and performance, its dividends and the market price of The Star’s shares may be adversely affected, sometimes materially, by a number of risk factors. Holders of The Star shares (The Star Shareholders) should accordingly be aware that an investment in The Star
Slide 30: Key Risks: Casino Licences
KEY RISKS (CONT’D) At this stage, there has been no indication that any of these or any other relevant rights will be exercised by the NICC under any of these relevant agreements although there is a risk that the NICC may do so in the future. The Star is engaging with NICC in relation to the implica
Slide 31: Key Risks: Legal and Regulatory Compliance
KEY RISKS (CONT’D) (c) Legal and regulatory compliance The Star’s operations, financial performance and future prospects are dependent on the legal and regulatory frameworks in which it operates. Failure to comply with legal and regulatory requirements may give rise to significant investigations or
Slide 32: Key Risks: AML/CTF Uplift Program
KEY RISKS (CONT’D) The Star’s AML/CTF uplift program While The Star Group has and is continuing to develop and improve (including as part of its Remediation Actions – see ‘Remediation Actions’) its systems, policies, processes and controls that are designed to manage its obligations under the AML/CT
Slide 33: Key Risks: Class Actions
KEY RISKS (CONT’D) The claims served to date are substantially similar and allege The Star Group failed to comply with continuous disclosure requirements and engaged in misleading or deceptive conduct between 29 March 2016 and 16 March 2022 (in respect of the class actions served by Slater & Gordon
Slide 34: Key Risks: Remediation Actions
KEY RISKS (CONT’D) Going forward, failure to implement the Remediation Actions in an effective and timely manner and to the satisfaction of the NICC and OLGR may also give rise to other adverse regulatory outcomes that may diminish The Star’s financial position and/or performance. If the business un
Slide 35: Key Risks: Bell and Gotterson Recommendations
KEY RISKS (CONT’D) Bell and Gotterson review recommendations Further reforms recommended by the Bell Report and Gotterson Review may also be introduced, including further expected reforms in Queensland to introduce mandatory carded play, cash and time play limits and mandatory player pre-commitment
Slide 36: Key Risks: Casino Duty Reforms
KEY RISKS (CONT’D) Potential reforms to casino duty regimes There is a risk that the government of a jurisdiction in which The Star’s gaming or non-gaming business operates decides to make changes to its existing tax regime, including by raising taxes, implementing new ones or reducing the availabil
Slide 37: Key Risks: Funding and Liquidity
KEY RISKS (CONT’D) For these reasons, the final quantum of casino duty and interest cannot be reliably estimated at this stage, may be materially different to the amount provisioned and may have a material financial impact on The Star Group. (i) Availability of funding, service of debt financing, li
Slide 38: Key Risks: Queen's Wharf Financing
KEY RISKS (CONT’D) Queen’s Wharf financing arrangements (a) Refinancing risk For personal use only The Star and its joint venture partners (via DBC) entered into a debt facility agreements in 2020 in relation to DBC’s $1.6 billion project-level debt funding for Queen’s Wharf (QWB Funding). The QWB F
Slide 39: Key Risks: Other Financing Risks
KEY RISKS (CONT’D) If The Star is unable to acquire or renew any relevant financial services (in particular, transactional banking services), or do so on reasonable terms, this will have an adverse impact on the operations and financial position and performance of The Star, including with the result
Slide 40: Key Risks: VIP Business and Safer Gambling
KEY RISKS (CONT’D) For these reasons, any recovery in The Star’s VIP business remains uncertain. Business volumes may not recover to the levels previously experienced by The Star, and will impact The Star’s financial performance and position (see also ‘Impact of COVID-19 and future outbreaks of othe
Slide 41: Key Risks: Joint Venture Risk
KEY RISKS (CONT’D) (n) Association and joint venture risk The Star Group, along with its joint venture partners, holds interests in certain development and tourism asset owning entities being Destination Brisbane Consortium Integrated Resort Holdings Pty Ltd (50% as an associate); Destination Gold C
Slide 42: Key Risks: Development Projects and Competition
KEY RISKS (CONT’D) The Queen’s Wharf Brisbane is a significant project and investment for The Star. Notwithstanding that The Star Group has a pre-opening team to deliver a structured program to transition from Treasury Brisbane to Queen's Wharf Brisbane, there is also a risk that the potential retur
Slide 43: Key Risks: Shareholding Restrictions
KEY RISKS (CONT’D) (s) Consequences of breach of shareholding restrictions There are a number of restrictions on shareholdings in The Star which arise due to the requirements of various regulatory authorities. For personal use only The Star’s Constitution requires that a person must not have voting
Slide 44: Key Risks: Workforce and Climate Change
KEY RISKS (CONT’D) Due to the recent COVID-19 pandemic, travel restrictions, and border closures, there has been a reduction in the number of foreign workers available to offset the current labour shortage in Australia. The hospitality sector, which heavily relies on foreign workers, has been partic
Slide 45: Key Risks: Reputation and Economic Conditions
KEY RISKS (CONT’D) Recent regulatory actions involving The Star (see ‘Future suitability to hold casino licences in New South Wales and Queensland’ and ‘Appointment of external managers to NSW and Queensland casino operations’, as well as other key risks in this Presentation) have had, and may conti
Slide 46: Key Risks: Information Technology and Cyber
KEY RISKS (CONT’D) When possessing confidential customer and commercial sensitive data, there is a risk that these, or services The Star uses or is dependent upon, might fail, including because of a leak or unauthorised access or use. Most of The Star’s daily operations are computer-based and inform
Slide 47: Key Risks: Insurance
KEY RISKS (CONT’D) If the Star Group needs to make significant claims against its existing insurance policies, this may have an adverse impact on its insurance premiums and expenses going forward, which in turn may have an adverse impact on its financial performance and position (see also ‘Developme
Slide 48: Key Risks: Accounting and Cost Discipline
KEY RISKS (CONT’D) (s) Change in accounting policy Australian Accounting Standards are issued by the Australian Accounting Standards Board and are not within the control of The Star and its Directors. Changes to the Australian Accounting Standards or the interpretation of those Standards could affec
Slide 49: Key Risks: Share Price and Market
KEY RISKS (CONT’D) • changes in the market price of ordinary shares and/or other capital securities or other equity securities issued by The Star or by other issuers, or changes in the supply of equity securities or capital securities issued by The Star or by other issuers; • changes in laws, regula
Slide 50: Key Risks: Underwriting
KEY RISKS (CONT’D) • ASX makes any official statement to any person, or indicates to The Star or the Underwriters that it will not grant permission for the official quotation of the New Shares under the Entitlement Offer or Placement, or the approval is subsequently withdrawn, qualified (other than
Slide 51: Key Risks: Underwriting Termination
KEY RISKS (CONT’D) The Underwriting Agreement may also be terminated by the Underwriters in circumstances where the following repricing event is notified to The Star by an Underwriter (and the parties acting in good faith and reasonably, are unable to reach an agreement as to the amendments to the U
Slide 52: Dividends May Fluctuate or Not Be Paid
KEY RISKS (CONT’D) (f) Dividends and other distributions may fluctuate or may not be paid In accordance with the conditions of its debt covenant waivers, if the conditions to the granting of that relief are satisfied, no dividend may be declared or paid on The Star’s ordinary shares by The Star, nor
Slide 53: Other External Events
KEY RISKS (CONT’D) (k) Other external events Acts of terrorism, an outbreak of international hostilities, labour strikes, civil wars or fires, floods, earthquakes, cyclones and other natural disasters (including where the frequency and severity of those events increase as a result of the effects of
Slide 54: Foreign Selling Restrictions
FOREIGN SELLING RESTRICTIONS This document does not constitute an offer of New Shares of The Star in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside Australia exce
Slide 55: Foreign Selling Restrictions
FOREIGN SELLING RESTRICTIONS France This document has not been, and will not be, registered with or approved by any securities regulator in France or elsewhere in the European Union. Accordingly, this document may not be made available, nor may the New Shares be offered for sale, in France except in
Slide 56: Foreign Selling Restrictions
FOREIGN SELLING RESTRICTIONS This document has been given to you on the basis that you are an "institutional investor" or an "accredited investor" (as such terms are defined in the SFA). If you are not such an investor, please return this document immediately. You may not forward or circulate this d
Slide 57: The Star Entertainment Group
For personal use only THE STAR ENTERTAINMENT GROUP 57
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