April 16, 2020 / 5:51 AM / 4 months ago

Australia's top casinos flag big layoffs, new debt funding to combat virus

(Reuters) - Australia’s top two casino operators said on Thursday they have laid off about 20,000 staff either temporarily or permanently and lined up about $760 million in bank credit to survive the coronavirus crisis that has battered the industry.

FILE PHOTO: The Crown Casino complex is pictured in Melbourne March 19, 2016. REUTERS/Jason Reed/File Photo

Crown Resorts Ltd, the country’s biggest, said it secured A$1.01 billion ($634.38 million) in debt funding and that 95% of its employees have now been laid off either temporarily or permanently.

And separately, No. 2 Star Entertainment Group said it has added an A$200 million 12-month credit line, and reiterated that it has stood down about 8,500 staff.

Casino operators are among the businesses worst hit by Australia’s measures to contain the spread of the coronavirus, which include shuttering of casinos and severe restrictions on movement of people. New Zealand’s SkyCity Entertainment Group has also temporarily laid off most of its staff in Australia.

The layoffs come as Australia’s economy looks destined for its first recession in three decades as large swaths of the economy have been forced to shut to fight the outbreak.

Crown said on Thursday it got A$560 million in new bilateral facilities and secured a further facility of A$450 million to fund the construction of its project in Sydney.

“As a result of today’s announcement, Crown is well placed to withstand an extended period of closure,” Ken Barton, Crown’s chief executive officer, said in a statement. Crown also said it will need to hire 2,000 people when the Sydney project opens.

Star said the addition of the new 12-month facility brings it cash and debt reserves up to around A$700 million.

Shares of Star jumped 8% by afternoon, while Crown was up 0.4%. The wider market was down 1.5%.

Crown added on Thursday that senior management pay, including that of the CEO, and director fees will be cut by 20%.

However, Crown said it will pay its interim dividend on Friday, unlike Star, which had previously said it would defer its payout.

Crown expects underlying operating cash costs to drop to between A$20 million to A$30 million per month as non-essential services at its casinos in Melbourne and Perth are suspended.

The Australian government has pledged A$130 billion to subsidise the wages of an estimated 6 million people.

But data on Thursday showed the unemployment rate tick higher in March before the widespread restrictions and shutdowns kicked in, and economists warned the worst was yet to come.

($1 = 1.5921 Australian dollars)

Reporting by Nikhil Kurian Nainan and Shreya Mariam Job in Bengaluru; Editing by Himani Sarkar and Muralikumar Anantharaman

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