1/10/2024 0 Comments Starmade enterpriseStar chief executive Robbie Cooke is still negotiating with the government about the tax changes and we’re unlikely to see any movement until after the NSW state election in late March, given the new tax rates will require legislative backing. That’s likely to mean serious job losses, given wages are the key operating expense in these service businesses. Rather, Star is signalling it would need to drastically restructure the Sydney business to extract costs. While talk of “urgent reviews” and “maximising value” can sometimes be code for asset sales, that is not the intention here. “In this scenario, The Star intends to undertake an urgent review of The Star Sydney’s operating model and assets, with a view to maximising value for the group’s shareholders.” But as Star made clear on Monday, the size of the hit means it will need to revisit the entire model on which the Sydney casino has been built if the tax changes go through as proposed. That reflects Star’s internal view that it would need to pay an extra $100 million in taxes each year under Kean’s changes. That drastic action would start with a massive write-down of the value of the Sydney casino, possibly by as much as $1.6 billion. NSW Treasurer Matt Kean has kicked Star when its down. The stock plunged another 20 per cent on Monday to an all-time low of $1.51, after the scandal-plagued company delivered an ugly trading update and warned that it would need to take drastic action should the NSW government make good on Kean’s proposed duty changes. Since Kean announced the move on December 17, Star’s market valuation has fallen a staggering 42 per cent, wiping more than $1 billion from its market capitalisation. It’s hard to remember a prospective policy change that smashed a company’s valuation quite like NSW Treasurer Matt Kean’s decision to raise casino taxes on The Star Entertainment Group.
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