SMS Finance

Star secures $1.2 billion in desperate bid to survive

The embattled Sydney-based casino operator, Star (ASX:SGR), has successfully convinced investors to contribute hundreds of millions of dollars for the second time this year, in a desperate attempt to keep the business afloat.

After raising $800 million from shareholders in February, the struggling casino operator sought another $750 million in an equity offering at 60 cents per share. Notably, $161 million came from major institutions, while $589 million was contributed by other investors through an accelerated issue.

In addition to this equity infusion, Barclays Bank and Westpac Banking Corporation provided $450 million in new debt facilities, bringing the total capital raised to $1.2 billion.

Despite a small shortfall (only $565 million was sought), Star reported on Wednesday that it had successfully secured $565 million, not mentioning the minor deficit.

However, the institutional entitlement offer only had a lackluster 67% take-up rate, indicating that a third of major shareholders remain skeptical about Star’s prospects for future investment. This uncertainty caused the shares to plummet by 17% at one point after the trading halt was lifted, stabilizing at around 64 cents.

Investors who participated in the February offering at $1.20 per share now face substantial losses, and some have chosen to invest again despite the risk.

The upcoming retail offer, fully underwritten due to Star’s anticipation that its retail base would not fully support the capital raising, is expected to generate approximately $185 million. This offering, priced at 60 cents per share, is set to open next Tuesday.

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