Australia’s Star Entertainment Group says it has reached agreement with its debt providers to amend debt covenants for the 31 December 2020 and 30 June 2021 testing dates.
The amendments, aimed at helping Star in its recovery from the COVID-19 pandemic which has restricted operations at its casinos in Sydney, Brisbane and the Gold Coast, include a full waiver of its gearing and interest cover ratio covenants for the 31 December testing date changes to of its financial covenant ratios for the 30 June 2021 testing date, allowing for enhanced gearing and interest cover ratio headroom.
No cash dividends will be paid by Star until gearing falls below 2.5x.
While the amendments provide positive news for Star, the news isn’t so good for employees following the conclusion of phase one of the federal government’s JobKeeper wage subsidy scheme on 27 September.
The scheme was introduced during the early days of the pandemic in order to help businesses retain staff by providing AU$1,500 per fortnight for each eligible staff member.
Star said it had almost 7,000 eligible staff for phase one but only 3,000 for the new phase two, which also reduces the fortnightly payments to between AU$1,200 and AU$750 depending on hours usually worked.
“Based on the test for employer eligibility and The Star’s actual performance to date, which includes GST turnover from the VIP Rebate business, The Star Sydney is eligible for JobKeeper phase 2,” Star said.
“There are approximately 3,000 staff eligible for JobKeeper employed by The Star Sydney entity. The Star Queensland and the Group employer entities will not be eligible for JobKeeper phase 2.”
Star Entertainment Group’s three properties have all reopened in recent months, however The Star Sydney remains limited in capacity with the main gaming floor split into three distinct zones with caps on the number of people allowed in each.