BARANGAROO – Sydney’s newest waterfront destination; @crownsydney.com.au/
Australia’s two big casino groups, Crown Resorts and the Star group, have released details of their survival strategies in a bid to reassure investors they can weather the shutdowns of their businesses due to the coronavirus.
The government announced that casinos must close on 23 March, resulting in two of the nation’s biggest employers laying off thousands of staff and closing their casinos.
The Star announced on Thursday it had executed an additional debt-funding facility with existing relationship banks for $200m to strengthen its liquidity position.
It said it has stood down about 8,500 staff and terminated casuals and contractors. It would access the government’s jobkeeper scheme for eligible employees, it said. The chief executive, Matt Bekier, had taken a 40% pay cut and directors had cut their fees by 50%.
Crown announced on Thursday it had lined up facilities with its banks for a total of $560m and had agreed terms with the three banks funding the construction of its Barangaroo project to allow building to continue.
“This facility [for $450m] remains subject to final credit approvals and long-form documentation,” Crown said.
It said its current cash balance of “approximately $500m, together with its ability to secure over $1bn in additional debt facilities”, reflected “Crown’s strong financial position” during the period of disruption. It did not provide estimates of how long its cash would last.
Crown has now stood down about 95% or more than 11,500 of its employees. “Only employees in business-critical functions remain actively working,” the company said.
Ex-gratia payments of two weeks’ pay were given to those full-time and part-time employees, while casuals were given a lump sum payment of $1,000. Staff were also allowed to draw down on existing annual and long-service leave.
Crown’s chief executive, Ken Barton, and the board have taken 20% cuts to their remuneration.
Including the new facility, the Star said it had available cash and undrawn debt facilities of $700m. That, it said, would provide sufficient liquidity for an extended period of shutdown.
Unlike Crown, Star provided estimates of the rate it would burn through cash, saying it would need about $220m in total under a three-month shutdown to 30 June and $320m in total under a six-month shutdown to 30 September.
Those estimates include operating expenses, drawdowns by employees on accrued annual and long-service leave entitlements, payables offset by receivables, interest payments, and capital expenditure payments, Star said.
Star’s expansion plans were at a much earlier stage. Crown, however, is midway through the construction of its $2.2bn high-roller casino and apartment block at Barangaroo, which is designed to cater to VIP gamblers from China. Many of the luxury units have also been sold to offshore investors.
“Crown intends to continue construction of the Crown Sydney project as planned and, absent any further delays arising from the impact of Covid-19, remains on track for completion of the Crown Sydney hotel resort by the end of the year,” Crown said in the statement to the ASX
A slowdown or halting of major construction projects would be a further blow to the Australian economy.
“Currently, there are over 1,300 people employed on the construction of Crown Sydney, which is expected to be maintained until completion,” the company said. “In the lead-up to the full opening of Crown Sydney, Crown expects to recruit over 2,000 people to work in the hotel resort.”
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