👉 Background: Star Entertainment Group is the ASX-listed gambling and entertainment company that owns major casinos such as The Star Brisbane, The Star Gold Coast and The Star Sydney. Star was once a high roller of the casino world - worth more than $5 billion. But after major scandals including a money laundering hit, they’ve been on a losing streak ever since.

‍👉 What happened: Star was meant to release its half year financial reports last Friday but its board wasn’t comfortable to sign off on the financial statements. Star has been desperately rattling the tin, looking for new investors to meet its debts and short-term payments.

‍👉 What else: The board weren’t confident that Star could pay its bills when they fall due and has warned that if it doesn’t receive any funding, it will be all-over-red-rover… because it wouldn’t be a “going concern” anymore.

What's the key learning?

💡“Going concern” is an accounting principle that assumes a company will continue its operations into the foreseeable future. For Star Entertainment, not being able to secure funding means they won’t be able pay short-term debts, like payroll or interest repayments on loans. This puts their “going concern” status at risk.

💡Star investors would be closely watching whether the board signs off on these statements. If they did sign off, it would be a positive signal for Star’s financial health and viability. But, given the CEO reckons it would take hundreds of millions to keep Star running… it seems like the writing is on the wall.

💡After the announcement, Star’s share price dropped 10% and it’s now worth just $335 million — or 7% of its peak value.