Star Entertainment to divest Star Sydney Event Centre assets as it hunts for cash
By John Biju
(Reuters) -Star Entertainment said on Wednesday it would divest its Star Sydney Event Centre assets to theatre owner and operator Foundation Theatres for A$60 million ($37.51 million) as the casino operator undergoes a cash and liquidity crunch.
Shares of the company rose as much as 13% to A$0.130 in early trade, while the broader benchmark index was up 0.4%.
Star's unit, The Star Entertainment Sydney Properties, has entered an exclusivity arrangement and binding term sheet setting out key conditions for the divestment, the company said in a statement.
The divestment includes The Star Sydney Event Centre and other additional spaces within The Star Sydney complex.
"We continue to work on a number of other potential non-core asset transactions," Chief Executive Steve McCann said.
The move comes as the embattled casino operator raised concerns about liquidity and cash earlier this month, having only A$79 million in available cash at the end of the December quarter.
Star has been in the eye of the perfect storm, which has hit Australian casino operators, leading to multiple regulatory enquiries, casino closures and top executives departures.
"While it isn't enough to revive the company, it is a welcome start on the journey to rebuilding," said Grady Wulff, a market analyst at Bell Direct.
"The entertainment assets that have been sold will bring a busy schedule of entertainment to Star's Sydney operations which, in turn, drives traffic to the company's casino as a secondary benefit to the sale of these assets."
The Event Centre and additional spaces will be converted into new venues to host theatre, live entertainment and contemporary music in Sydney, Foundation Theatres said in a separate statement.
Foundation Theatres has been granted planning approval for conversion of the Event Centre into a 1550-seat Broadway-style theatre, it added.
($1 = 1.5995 Australian dollars)
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