n an attempt to preserve its liquidity from the material impact the shutdown of its casinos in Sydney, the Gold Coast and Brisbane would have, Star Entertainment has temporarily stood down close to 8100 people (90 percent of its workforce).
The announcement came after government measures to stem the spread of COVID-19 forced the ASX-listed casino operator to close its gaming floors, restaurants, and conference facilities.
"The Star has taken a very difficult, but necessary, decision in relation to its workforce ... these stand-downs include senior management," the company said in a release to the ASX.
Unlike companies that have stood down workers during the coronavirus crisis such as Qantas and Virgin Australia, The Star said it would pay stood-down workers two weeks paid "pandemic leave", the Sydney Morning Herald reports.
After that employees will be able to use annual leave and long service leave entitlements before going on unpaid leave. The Star said its board of directors and senior managers would forgo parts of their directors' fees and salaries. The company has $480 million in available cash and undrawn debt.
"This is a unique environment and one beyond our control in which we’re determined to balance the necessary measures needed to protect the business while considering the considerable human impact to our workforce," The Star chairman John O'Neill said.
Fellow casino operator Crown Resorts has also closed its gaming floors in Melbourne and Perth, but neither gambling group has guided the market on the financial impact of the closures.
Morgan Stanley analysts said on Wednesday that as well as a blow to Star's earnings, the coronavirus could disrupt its $2.6 billion construction project at Queens Wharf in Brisbane and the $370 million towers upgrade to its Gold Coast property. "Whilst these projects are 'de-risked' by sharing the capex with [joint venture] partners Chow Tai Fook and Far East Consortium, these two operators' balance sheet strength are also important in this global economic event," the broker said in a note to clients.
Ratings agency Moody's on Tuesday put Crown on a ratings review for a downgrade due to the coronavirus. "Moody's base case assumes the Australian government's shutdown of all non-essential services continues for six months, followed by a gradual recovery in patronage and tourism numbers from October 2020," the agency said. "However, there are high risks of more challenging downside scenarios, and the severity and duration of the pandemic and containment measures remain uncertain."