Star stock plunges 50% on first day back on the ASX!

It's been four weeks since the company last traded on the market.

| More on:
A man sitting at a computer is blown away by what he's seeing on the screen, hair and tie whooshing back as he screams argh in panic.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's been four weeks since Star Entertainment Group Ltd (ASX: SGR) stock traded on the ASX.

Before this morning's opening bell, the last time you could buy and sell shares in the S&P/ASX 200 Index (ASX: XJO) casino operator was on Thursday, 29 August.

Shares closed down 2.2% on the day, at 45 cents, bringing the stock down 28.6% over the prior 12 months.

Created with Highcharts 11.4.3Star Entertainment Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

With Star resuming trade on the ASX today, loyal shareholders will be looking back on that 2.2% loss as a drop in the bucket. Less loyal shareholders are likely joining the cadre of sellers.

In morning trade on Friday, Star shares are down 50.0% on the ASX, changing hands for 22.5 cents apiece.

That sees the ASX 200 stock down a painful 64.3% in a year.

Why was Star stock suspended on the ASX?

Star shares took a break from the ASX at the company's request before market open on 30 August. The casino operator initially indicated the pause would only last for a few days.

This came after the company received the second Bell report into its operations, which was released by the NSW Independent Casino Commission (NICC).

With the report citing "governance and cultural concerns", Star said it was "considering the report and the implications it may have for disclosures concerning its financial results for FY24".

The company was also said to be getting set to announce a $1.4 billion write-down of its casino assets along with a range of cost reductions.

What's happening now?

During the past month's pause from the ASX, Star has kept investors up to date with regular announcements of its ongoing work regarding its financial position.

That included its agreement to sell the leasehold interest in the Treasury Brisbane Casino building to Griffith University for $67.5 million. Though the company was said to need some $240 million to stabilise its balance sheet.

After market close this Wednesday, Star released an ASX announcement revealing that it had reached an agreement on a new debt facility for up to $200 million in two instalments.

But this will come at a significant cost.

As Motley Fool analyst Mitchell Lawler noted on the day:

The interest rate will be 13.5% per annum. This will apply to the new loan as well as the old loan, which has been reduced from $450 million to $334 million. Assuming the full amount is held for a year, the interest alone would be roughly $72 million.

The new loan will need to be paid by December 2027.

Yesterday, when Star shares were still halted on the ASX, the company released its delayed results for FY 2024.

Among the core metrics putting the ASX 200 casino operator's shares under selling pressure, Star reported a statutory net loss of $1.68 billion, spurred by a non-cash impairment charge of $1.44 billion.

Star reported revenue of $1.68 billion over the 12 months, with pre-tax earnings of $175 million.

On the regulatory front, Star is expected to submit a report to the NICC today on its financial plans and how it intends to address the issues uncovered by the second Bell report.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

A gambler at a casino bets a pile of chips on one number
Consumer Staples & Discretionary Shares

Own Star Entertainment shares? 12 things to weigh up before voting on takeover

Let's take a look.

Read more »

A car dealer stands amid a selection of cars parked in a showroom.
Broker Notes

Up 77% in a year, guess how much more upside Macquarie tips for Eagers Automotive shares

Macquarie released its latest analysis on Eagers Automotive fast rising shares this morning.

Read more »

A farmer looks backwards towards his crops.
Consumer Staples & Discretionary Shares

Elders shares result: The good, the not so good and the interesting, according to Macquarie

It was a mixed half for the agribusiness company. Here's Macquarie's take.

Read more »

Young man sitting at a table in front of a row of pokie machines staring intently at a laptop. looking at the Crown Resorts share price
Consumer Staples & Discretionary Shares

Takeover terms found unfair to Star Entertainment shares investors but the 'only lifeline' left

Star has released the independent expert's report into the Bally's takeover deal and set a date for the vote.

Read more »

A warehouse worker is standing next to a shelf and using a digital tablet.
Consumer Staples & Discretionary Shares

Wesfarmers share price dips amid strategy day for investors

What's ahead for this diversified conglomerate?

Read more »

A man looks a little perplexed as he holds his hand to his head as if thinking about something as he stands in the aisle of a supermarket.
Consumer Staples & Discretionary Shares

Should I buy Woolworths shares today?

Woolworths shares have gained far less than Coles shares over the past year. Is that about to change?

Read more »

A woman sits at her home computer with baby on her lap, and the winning ticket in her hand.
Consumer Staples & Discretionary Shares

Which 'enduring high-quality business' has become a forgotten ASX 200 stock?

Fundie says this ASX 200 consumer discretionary stock has been flying under investors' radar.

Read more »

A young man sitting at an outside table uses a card to pay for his online shopping.
Consumer Staples & Discretionary Shares

Why is the Kogan share price crashing 12%?

Profits are down at this ecommerce company during the second half.

Read more »