JPMorgan Buys Stake in Australia’s Star Entertainment
JPMorgan Chase & Co has taken a big stake in Australian casino operator Star Entertainment Group, buying 5.47% of the company’s shares. The investment comes as Star is struggling with investigations, falling stock prices and the need to stabilise its balance sheet through asset sales and new debt.
Star Entertainment’s Financial and Regulatory Issues
Star Entertainment is under the pump due to ongoing regulatory investigations particularly around anti-money laundering breaches. Since 2022 the company’s share price has been in free fall, down 50% in 2023 alone, 52% in 2022 and 66% in 2021. As of October 2023 the company’s shares were trading at AUD0.255 ($0.17).
On top of the falling share price Star has been delayed in reporting its financial results which led to a temporary suspension from the ASX. The company has said it needs to sell some assets to get its finances back on track and pay off large regulatory bills. To help with cash flow Star has secured a new credit facility of up to AUD200 million ($134.5 million) which includes an immediate AUD100 million ($67.3 million) injection.
JPMorgan’s Stake
JPMorgan’s stake in Star Entertainment has raised questions about what the bank will do. JPMorgan hasn’t said what its plans are but industry experts think it may push for changes in the way the company operates, possibly including the sale of key assets or even a full takeover. This is a critical time for Star which is still under government scrutiny of its flagship property The Star Sydney due to regulatory breaches.
Earlier in 2023 there were rumors of a takeover of Star by Hard Rock International but the company denied any interest. Meanwhile Australian asset manager Perpetual also increased its stake in Star, adding to the complexity of the ownership picture.
JPMorgan’s involvement in Star Entertainment adds another layer of uncertainty. The bank may team up with other investors like Perpetual to pump more capital into the struggling casino operator or JPMorgan may push for asset sales or more restructuring as Star tries to get back on its feet from its financial and regulatory issues.