NSW government’s tax respite creates more challenges for Star

afr.com:

A respite from the NSW government’s planned casino tax increase should have been a welcome relief for Star, but investors can be forgiven for still feeling uneasy.

Intense regulatory scrutiny, hundreds of millions of dollars in fines, four class actions and softening turnover in its casinos have demolished Star Entertainment Group’s share price and removed any hope that investors will, at least in the short-term, make a return. The stock has fallen 60 per cent since this time last year, making it one of the 10 worst performers in the S&P/ASX 200.

The Star Entertainment’s new CEO, Robbie Cooke, has a lot to do. A tax reprieve has only delayed that. Louie Douvis

Star chief executive Robbie Cooke is cutting jobs and costs to ride out the storm, but his $40 million cost reduction program has not been enough to convince investors the embattled group can turn itself around.

Its newest major investor, pub and gaming mogul Bruce Mathieson, said in March that Star was a “wonderful asset” even if it had a bumpy road ahead. He said he preferred to fix businesses that were wounded.

Star’s wounds are deep.

The near-term issue is a casino tax in NSW, home to Star’s flagship casino. All signs now point to NSW Treasurer Daniel Mookhey reframing the poorly thought out tax rises of the previous government, which were based on financial figures from 2019. Star boss Cooke has, at the very least, convinced the new government that the proposal outlined by former treasurer Matt Kean would jeopardise the company’s commercial viability.

But the reprieve, announced two weeks ago, has kicked one problem down the road and inadvertently caused another.

Star has spent months trying to refinance debt, the bulk of which matures in July next year. In an