👉 Background: The Star Entertainment Group is the casino operator that runs casinos and hotels in NSW and Queensland. They have been under the pump more than the last couple of years:

• In 2021, Star was found to have insufficient anti-money laundering controls in place.
• Its gambling licence was suspended and it had to pay more than $100 million in fines.
• Star raised $800 million from its shareholders in February this year in a rescue package.

👉 What happened: Now, just 7 months later, Star is looking to raise another $750 million from shareholders through a rights issue to shareholders... at a whopping 20% discount. On top of that, Star has secured $450 million in new debt facilities.

👉 What else: Since the news, Star Entertainment's share price has dropped more than 15%... and over 69% in the past year.

What's the key learning?

💡A rights issue is a way for companies to raise capital by offering existing shareholders the opportunity to purchase additional shares... often at a discount to the last traded price.

💡When a company creates new, cheaper shares, it lowers the average value of all shares in the market. And, since Star is creating new shares, it means that any of the shareholders who don't participate will have their current shareholding diluted.

💡Interesting for Star, only 67% of their shareholders took up their rights issue, which is below average, so it seems like many of Star Entertainment's investors are taking their chips off the table.

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