Star Entertainment Group Limited · ASX:SGR
Star Entertainment — The Star Entertainment Group — Investor Presentation (September 2023)
52 slides from Star Entertainment's investor presentation, Sep 25, 2023
Slide 1: Refinancing and Further Capital Structure Initiatives
For personal use only THE STAR ENTERTAINMENT GROUP REFINANCING AND FURTHER CAPITAL STRUCTURE INITIATIVES INVESTOR PRESENTATION MONDAY 25 SEPTEMBER 2023 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Important Notice and Disclaimers
IMPORTANT NOTICE AND DISCLAIMERS (a) 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 information
Slide 3: Important Notice and Disclaimers (cont'd)
IMPORTANT NOTICE AND DISCLAIMERS (CONT’D) Non-IFRS measures Investors should also be aware that certain financial measures included in this Presentation are ‘non-IFRS financial information’ under ASIC Regulatory Guide 230: ‘Disclosing non-IFRS financial information’ published by ASIC and also ‘non-G
Slide 4: Important Notice and Disclaimers (cont'd)
IMPORTANT NOTICE AND DISCLAIMERS (CONT’D) (f) Not for distribution or release in the United States This Presentation may not be distributed or released in the United States. This Presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States,
Slide 5: Important Notice and Disclaimers (cont'd)
IMPORTANT NOTICE AND DISCLAIMERS (CONT’D) You acknowledge and agree that: ▪ determination of eligibility of investors for the purposes of the Offer is determined by reference to a number of matters, including legal and regulatory requirements, logistical and share registry constraints and the discre
Slide 6: Important Notice and Disclaimers (cont'd)
IMPORTANT NOTICE AND DISCLAIMERS (CONT’D) (h) Not an offer, advice or recommendation This Presentation is for information purposes only and should not be read or understood as an offer, invitation, solicitation, inducement or recommendation to subscribe, buy or sell New Shares or any other financial
Slide 7: Contents
THE STAR ENTERTAINMENT GROUP CONTENTS 1. REFINANCING AND FURTHER CAPITAL STRUCTURE INITIATIVES For personal use only 2. TRADING UPDATE 3. FUNDING AND NEW DEBT FACILITIES 4. EQUITY RAISING DETAILS 5. SUMMARY OF KEY RISKS APPENDICES 7 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 8: Strengthened Balance Sheet and Additional Flexibility Through New Debt Facilities and Equity Raising
STRENGTHENED BALANCE SHEET AND ADDITIONAL FLEXIBILITY THROUGH NEW DEBT FACILITIES AND EQUITY RAISING ♦ New four-year debt facilities of $450m committed and underwritten by Barclays Bank PLC and Westpac Banking Corporation1 For personal use only ♦ $750m entitlement offer and placement (Equity Raising
Slide 9: Refinancing and Further Capital Initiatives
REFINANCING AND FURTHER CAPITAL INITIATIVES Today’s announcement is the culmination of an extensive refinancing process ♦ As previously announced, The Star has been undertaking a broad refinancing For personal use only process to improve its funding arrangements and capital structure ♦ The Star has
Slide 10: What The Star Has Looked to Address
WHAT THE STAR HAS LOOKED TO ADDRESS The Star’s existing debt structure is no longer fit for purpose. The refinancing and further capital initiatives announced today are aimed at increasing tenor, liquidity and flexibility to help navigate a range of operating and regulatory uncertainties For persona
Slide 11: Overview of Refinancing and Further Capital Structure Initiatives
OVERVIEW OF REFINANCING AND FURTHER CAPITAL STRUCTURE INITIATIVES $750 million Equity Raising, $450 million of new committed and underwritten debt facilities1, and additional funding from asset sales and business operations For personal use only $750m $450m Asset Operating Equity New 4-year sales2 c
Slide 12: Contents
THE STAR ENTERTAINMENT GROUP CONTENTS 1. REFINANCING AND FURTHER CAPITAL STRUCTURE INITIATIVES For personal use only 2. TRADING UPDATE 3. FUNDING AND NEW DEBT FACILITIES 4. EQUITY RAISING DETAILS 5. SUMMARY OF KEY RISKS APPENDICES 12 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 13: Trading Update: Monthly Earnings Post Cost Out Program
TRADING UPDATE MONTHLY EARNINGS POST COST OUT PROGRAM JULY AND AUGUST 2023 MONTHLY GROUP NORMALISED RESULTS ($M) FY23 4Q MONTHLY AVERAGE AVERAGE1 Slots 58.0 58.0 Domestic Tables For personal use only 53.3 56.5 Non-gaming 26.9 29.1 Total Domestic Revenue 138.3 143.5 Gaming taxes and levies (34.8) (35
Slide 14: Trading Update: Other Matters
TRADING UPDATE OTHER MATTERS ♦ Trading for the remainder of FY24 is subject to a range of factors, including: For personal use only • the reintroduction of complimentary services in private gaming areas in Sydney • ongoing regulatory operating restrictions and exclusions TRADING • competitive enviro
Slide 15: Contents
THE STAR ENTERTAINMENT GROUP CONTENTS 1. REFINANCING AND FURTHER CAPITAL STRUCTURE INITIATIVES For personal use only 2. TRADING UPDATE 3. FUNDING AND NEW DEBT FACILITIES 4. EQUITY RAISING DETAILS 5. SUMMARY OF KEY RISKS APPENDICES 15 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 16: Funding and Capital Management
FUNDING AND CAPITAL MANAGEMENT Refinancing and further capital structure initiatives announced today are intended to strengthen The Star’s balance sheet and improve the quality of The Star’s liquidity position by extending tenor OVERVIEW DEBT MATURITY PROFILE AS AT 30 JUNE 2023 ($M) ♦ Net proceeds o
Slide 17: Overview of New Debt Facilities
OVERVIEW OF NEW DEBT FACILITIES ♦ $450m of new debt facilities1 provided by Barclays Bank PLC and Westpac Banking Corporation • $150m four-year committed revolving credit facility For personal use only • $300m four-year underwritten term loan NEW DEBT ♦ The Star has the flexibility to further optimi
Slide 18: Contents
THE STAR ENTERTAINMENT GROUP CONTENTS 1. REFINANCING AND FURTHER CAPITAL STRUCTURE INITIATIVES For personal use only 2. TRADING UPDATE 3. FUNDING AND NEW DEBT FACILITIES 4. EQUITY RAISING DETAILS 5. SUMMARY OF KEY RISKS APPENDICES 18 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 19: Equity Raising Details
EQUITY RAISING DETAILS ♦ $750 million Equity Raising comprised of: Offer Structure • a 1 for 1.65 pro rata accelerated non-renounceable entitlement offer (Entitlement Offer) to existing eligible shareholders to raise approximately $589 million; and For personal use only and Size • an institutional p
Slide 20: Equity Raising Timetable
EQUITY RAISING TIMETABLE Events Dates Trading Halt Monday, 25 September For personal use only Monday, 25 September – Placement and Institutional Entitlement Offer bookbuild Tuesday, 26 September Announcement of results of the Placement and Institutional Entitlement Offer Wednesday, 27 September The
Slide 21: Contents
THE STAR ENTERTAINMENT GROUP CONTENTS 1. REFINANCING AND FURTHER CAPITAL STRUCTURE INITIATIVES For personal use only 2. TRADING UPDATE 3. FUNDING AND NEW DEBT FACILITIES 4. EQUITY RAISING DETAILS 5. SUMMARY OF KEY RISKS APPENDICES 21 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 22: 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 23: Contents
THE STAR ENTERTAINMENT GROUP CONTENTS 1. REFINANCING AND FURTHER CAPITAL STRUCTURE INITIATIVES For personal use only 2. TRADING UPDATE 3. FUNDING AND NEW DEBT FACILITIES 4. EQUITY RAISING DETAILS 5. SUMMARY OF KEY RISKS APPENDICES 23 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 24: 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 25: Key Risks: Licences and Regulatory
KEY RISKS (CONT’D) The Star is engaging with the NICC in relation to the implications of, and recommendations in, the Bell Report, the appointment of the Manager of The Star’s Sydney casino (see ‘Appointment of external managers to NSW and Queensland casino operations’) and the potential reinstateme
Slide 26: Key Risks: Regulators and Legal Compliance
KEY RISKS (CONT’D) The Star is engaging with the relevant regulators in NSW and Queensland in relation to the existing appointment of the Manager of The Star’s Sydney casino and Special Manager of The Star’s casinos in Brisbane and the Gold Coast, and the Remediation Actions and suitability of The S
Slide 27: Key Risks: AML/CTF and ASIC Proceedings
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 28: 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 action served by Maurice Blackburn
Slide 29: Key Risks: Contingent Liabilities
KEY RISKS (CONT’D) As the outcomes of these actions (including the matters noted in ‘Legal and regulatory compliance’) remain uncertain and to the extent to which any relevant insurance policies may respond, contingent liabilities exist for possible amounts that may become payable that are in excess
Slide 30: Key Risks: Recent Regulatory Changes
KEY RISKS (CONT’D) Recent regulatory changes in NSW and Queensland The casino industry in Australia has been subject to a number of recent regulatory changes. The Star is currently adjusting to recent regulatory changes which require changes to The Star’s operations, through the introduction of refo
Slide 31: Key Risks: Impairment and Taxation
KEY RISKS (CONT’D) Consistent with accounting standards, The Star is periodically required to assess the value of its assets. Where the recoverable amount of an asset is assessed to be less than its carrying value, The Star is obliged to recognise an impairment charge in its profit and loss account
Slide 32: Key Risks: Availability of Funding
KEY RISKS (CONT’D) A provision for the potential impact of the review of rebate play for all patrons has been made in the balance sheet at 30 June 2023. However, the final quantum of casino duty and interest cannot be reliably estimated at this stage, may be materially different to the amount provis
Slide 33: Key Risks: Debt Defaults
KEY RISKS (CONT’D) The “Material Adverse Effect” event of default under the Common Terms Deed Poll is any event which occurs which has (or a series of events occurs, which events together, have had) a material adverse effect on the ability of The Star to perform its payment obligations under the rel
Slide 34: Key Risks: Refinancing Risk for Joint Ventures
KEY RISKS (CONT’D) Refinancing risk for joint venture projects The Star Group is involved in a number of projects and joint ventures with third parties. Each relevant joint venture entity’s ability to refinance its debt on reasonable terms as it becomes due or to repay the debt, its ability to raise
Slide 35: Key Risks: Credit Ratings and VIP Business
KEY RISKS (CONT’D) If any applicable credit rating is lowered or withdrawn, or any applicable rating is not maintained, this could adversely impact The Star Group’s cost of funds and related margins, competitive position and its access to capital and funding markets, including its ability to refinan
Slide 36: Key Risks: Capital Expenditure and Joint Ventures
KEY RISKS (CONT’D) Any unexpected increases in capital expenditure may need to be funded through external financing. There is no assurance that The Star will be able to obtain adequate external financing at acceptable prices (see the risk titled ‘Availability of funding, service of debt financing an
Slide 37: Key Risks: Queen's Wharf Brisbane
KEY RISKS (CONT’D) 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 return fr
Slide 38: 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. The Star’s Constitution requires that a person must not have voting power in The Star in e
Slide 39: Key Risks: Climate Change
KEY RISKS (CONT’D) (d) Climate change risk The Star, its customers and external suppliers, may be adversely impacted by the physical risks (including possibility of destruction or disruption to human life, physical and natural capital) and socioeconomic impacts (including impacts to liveability, foo
Slide 40: Key Risks: COVID-19 and Pandemics
KEY RISKS (CONT’D) (i) Impact of COVID-19 and future outbreaks of other communicable diseases or pandemics The events relating to COVID-19 have resulted in market changes and volatility of supply and demand. While restrictions on regional, domestic and international travel, events, meetings and othe
Slide 41: Key Risks: Failure of Risk Management Strategies
KEY RISKS (CONT’D) (l) Failure of risk management strategies The Star Group is in the process of improving its risk management strategies and internal controls involving processes and procedures intended to identify, assess, measure, monitor, report and mitigate the risks to which it is subject as n
Slide 42: Key Risks: Mergers, Acquisitions and Divestments
KEY RISKS (CONT’D) (r) Mergers, acquisitions and divestments The Star may engage in merger, acquisition or divestment activities which facilitate The Star’s strategic direction. These activities may involve entering new markets, exiting investments and/or expanding The Star’s current investment port
Slide 43: Key Risks: Investment and Cultural Risks
KEY RISKS (CONT’D) (w) Investment risks The Star invests funds it receives in the course of conducting its business. The value of those investments or the return on them may rise or fall as a result of circumstances beyond The Star’s control, including general economic conditions in Australia or ove
Slide 44: Underwriting Risk: Termination Events
KEY RISKS (CONT’D) • The Star’s existing debt facilities or any other debt facility or financial accommodation (including the Senior Debt Facility) is or is reasonably likely to be breached, terminated (or become void, voidable or unenforceable), rescinded, withdrawn or altered or amended without th
Slide 45: Underwriting Risk: Termination Events (cont'd)
KEY RISKS (CONT’D) • the agreement for the proposed sale Sheraton Grand Mirage Resort on the Gold Coast is or is reasonably likely to be materially breached, terminated (or become void, voidable or unenforceable), rescinded or altered in a material respect or amended in a material respect without th
Slide 46: Underwriting Shortfall
KEY RISKS (CONT’D) Shortfall The Underwriting Agreement provides that the Underwriter (and its affiliates) will not be required to take up any new shares in The Star to the extent that doing so would result in the Underwriter: • being obliged to notify the Treasurer under the Foreign Acquisitions an
Slide 47: Liquidity Risk and Dividends
KEY RISKS (CONT’D) (d) Liquidity risk The Star Shareholders who wish to sell their The Star shares may be unable to do so at an acceptable price, or at all, if insufficient liquidity exists in the market for The Star shares. The Star does not guarantee the market price or liquidity of The Star share
Slide 48: Share Price and Taxation Risks
KEY RISKS (CONT’D) It is possible that the price of The Star’s ordinary shares will trade at a market price below the Offer price as a result of these and other factors. It is also possible that new risks might emerge as a result of Australian or global markets experiencing extreme stress or existin
Slide 49: 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 50: Foreign Selling Restrictions (cont'd)
FOREIGN SELLING RESTRICTIONS (CONT’D) (c) 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 Fra
Slide 51: Foreign Selling Restrictions (cont'd)
FOREIGN SELLING RESTRICTIONS (CONT’D) (h) Switzerland The New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange or on any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing mate
Slide 52: For personal use only
For personal use only
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