Star Entertainment Group Shares Plummet 50% on ASX Re-entry

Highlights:

• 50% Stock Drop: Star Entertainment Group Ltd (ASX: SGR) saw its shares plunge by 50% upon resuming trade on the ASX.
• Financial Strain: The company reported a $1.68 billion net loss for FY24, driven by a substantial asset impairment.
• Regulatory Pressure: Star must address governance and cultural concerns highlighted in the Bell report while managing a costly new debt facility.

Star Entertainment Faces Major Stock Decline

After a four-week suspension, Star Entertainment Group Ltd (ASX: SGR) has returned to the ASX, only to see its stock plunge 50% in morning trade. At the time of writing, shares are trading at 22.5 cents, marking a sharp drop from the 45 cents they last traded at on August 29. The stock has dropped by 64.3% over the last 12 months.

Reasons Behind Suspension

Star's stock suspension followed the release of the second Bell report, which identified "governance and cultural concerns" within the company. The pause allowed the casino operator to consider the report's impact on its financial disclosures for FY24. Star is also preparing for a $1.4 billion asset write-down.

Debt and Financial Struggles

Star recently secured a $200 million loan facility but at a high cost—an interest rate of 13.5%. The loan must be repaid by December 2027, further increasing the company's financial strain. Additionally, Star reported a $1.68 billion statutory net loss for FY24, driven by a non-cash impairment charge.

What’s Next?

Star will now submit a report to the NSW Independent Casino Commission (NICC) detailing its financial strategy and addressing the Bell report's concerns. The company's prospects depend on its capacity to restore financial stability and address regulatory issues.

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