By Byron Kaye and Archishma Iyer
(Reuters) -Australia's No.2 casino operator, Star Entertainment, posted a second straight multi-billion-dollar annual loss as it wrote down the value of venues and said it might sell assets to raise cash, underscoring the industry's precarious condition.
The company wiped A$1.4 billion from the value of its casinos in Sydney, Brisbane and the Gold Coast because of "challenging trading conditions" and regulatory changes such as a switch to mandatory cashless gambling, pushing its bottom line to a loss of A$1.7 billion, from A$2.4 billion the prior year.
The company had secured a new debt facility a day earlier but needed cash to keep operating and had earmarked A$300 million of non-core assets to sell, it said, unveiling annual results on Thursday, four weeks after the reporting deadline.
The trading update shows a company in the eye of a perfect storm that has enveloped Australia's casinos for years: just as Star and larger rival Crown Resorts faced multiple inquiries into violations of anti-money laundering rules, COVID-19 brought lengthy closures and froze tourism.
Now persistently high energy, mortgage and grocery costs are eating into discretionary spending, weakening gamblers' spending power.
A government-ordered inquiry also delivered an adverse finding regarding Star's governance at its Sydney venue, which may bring tougher regulatory oversight and fines.
"We need to turn the business around, we need to arrest the current situation of negative EBITDA," new CEO Steve McCann told an analysts call, referring to earnings before interest, tax, depreciation and amortisation.
"We're clearly running an inflated cost level, we're working hard to get that under control," McCann added, saying the company had identified costs of A$100 million a year it could save.
"This business has been clearly on its knees."Shares of Star have been suspended from trade by the Australian Securities Exchange since it missed the 60-day cutoff to report its results for the year to end-June.
The company expects the stock to resume trading on Friday, McCann said on the call.
"It will be a tough time ahead. Australians have depleted their savings and the ratio of savings to net income has hit a new low," said Jessica Amir, a market strategist with trading platform Moomoo.
If Star did not see a return of Chinese nationals, who used to account for most of its revenue, she added, the market would question how Star could sustain the interest rate for the debt package it secured on Wednesday.
"Some would see (it) as a junk bond interest rate," she said.
Star gave no profit forecasts but said daily average revenue was down 10.7% since the start of mandatory cashless gambling in some areas and daily cash limits of A$5,000, measures ushered in Sydney in a bid to curb problem gambling.
($1=A$1.4611)