By Rishav Chatterjee
(Reuters) – Australia’s Star Entertainment said on Friday it had secured concessions on casino duty rates in a deal with New South Wales state, putting its shares on track for their best day in 18 years.
The cash-strapped company said the agreement will involve a transition plan to give it more time to stabilise operations surrounding its Sydney casino and prevent further job cuts.
The New South Wales government in December 2022 proposed to raise taxes on casino poker machine operators in the state from July 2023.
Under the new plan, Star will be levied duty of 20.9% on poker machines, while a higher rate of 22.91% will only be applicable from July 2027.
“For shareholders, this was the change of fortunes they were looking for and welcome news after plenty of bad news. It’s been a terrible 12 months with shares down 56% in that time,” said Josh Gilbert, market analyst at eToro AUS Capital.
It doesn’t mean that Star is out of the woods, and there are still plenty of challenges for the entertainment provider to navigate, but this a step in the right direction, added Gilbert.
Shares of the company were up as much as 25.1% to A$1.22, as of 0050 GMT.
“The formal consultative and structured approach implemented by the Government has enabled an in-principle agreement to be reached, which protects our Sydney team’s jobs and the viability of The Star Sydney,” CEO and Managing Director Robbie Cooke said.
Star in April had announced 500 job cuts and trimmed its annual earnings forecast as regulatory restrictions and weak consumer behaviour dented the casino operator’s earnings.
“The resolution of uncertainty regarding NSW casino duty rates will also help facilitate Star’s previously foreshadowed plans to refinance its existing debt funding arrangements,” the Brisbane-headquartered company said.
($1 = 1.5352 Australian dollars)
(Reporting by Rishav Chatterjee in Bengaluru; Editing by Anil D’Silva, Sherry Jacob-Phillips and Muralikumar Anantharaman)
