Star Entertainment Group is facing a severe liquidity crisis, with shares hitting an all-time low. According to Morningstar analyst Angus Hewitt, the company's cash reserves have dropped to AUD 79 million by the end of 2024, down from AUD 107 million in Q3.

The company is struggling to meet conditions for accessing the second AUD 100 million tranche of its debt facility, which requires additional subordinated capital of at least AUD 150 million. This comes as all three of Star's venues - The Star Sydney, The Star Brisbane, and the Star Gold Coast - are under government management following anti-money laundering investigations.

JPMorgan Chase recently liquidated its 5.47% stake in Star's voting stock, further complicating the company's financial situation. While asset sales or finding a potential buyer could provide relief, analysts believe immediate solutions are unlikely given the current economic climate and weak gaming performance.

The company may need to raise equity at around AUD 0.10 per share, a 30% discount to current trading prices, to access additional funding. Morningstar has assigned an "extreme uncertainty" rating to the stock with a price target of AUD 0.20, estimating a 50% chance the company will enter administration.

Key challenges facing Star Entertainment:

• Rapidly declining cash reserves
• Difficulty accessing credit facilities
• Government management of all venues
• Weak economic conditions
• Poor gaming performance
• Limited options for immediate financial relief

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