Star Entertainment Group Ltd (ASX: SGR) shares are avoiding the market weakness and roaring higher for once on Monday.
In early trade, the embattled casino and resorts operator's shares were up as much as 23% to 13.5 cents.
Its shares have since pulled back a touch but remain up 15% to 12.7 cents at the time writing.
Image source: Getty Images
Why are Star Entertainment shares rocketing?
As a reminder, the company's shares have crashed deep into the red over the past 12 months amid concerns that it could be on the verge on going bust.
As we covered here last month, Star Entertainment warned of this with its second quarter update. It said:
Given the reduction in the Group's available cash as at 31 December 2024 and the Group's ongoing financial and liquidity challenges, the Company and its directors continue to seek external advice in respect of their duties, including the applicability of, and the ongoing reliance on, the safe harbour provisions under the Corporations Act.
As noted above, the Group continues to explore other possible liquidity solutions. While discussions continue with respect to a range of different solutions, there is no certainty that any of these negotiations will result in one or more definitive arrangements that might materially increase the Group's liquidity position. In the absence of one or more of those arrangements, there remains material uncertainty as to the Group's ability to continue as a going concern.
In light of this, news that the company could soon get a major cash injection is giving Star Entertainment shares a boost today.
What's happening?
This morning, Star Entertainment advised that it has received several confidential, indicative and non-binding proposals from Chow Tai Fook Enterprises Limited (CTFE) and Far East Consortium International Limited (FEC) seeking to acquire its 50% interest in Destination Brisbane Joint Venture (DBC), along with other assets.
DBC includes its new Queen's Wharf complex in Brisbane.
However, the Star board has assessed each of the CTFE and FEC Proposals received to date, and after careful consideration concluded that none of the proposals have provided sufficient value.
The good news is that talks with CTFE and FEC continue and the company is looking to ascertain whether a sale of the 50% interest in DBC can be negotiated on satisfactory terms. But it warns that there is no certainty that any transaction will be concluded.
Finally, in other news, the company is in court today battling legal action from ASIC. The corporate regulator has pulled in former Star executives alleging breaches of directors' duties.
