Star shares sink after discounted equity raise

The news: Shares in Star Entertainment Group have slid 13% in early trading after resuming trading on the ASX following the completion of a discounted institutional capital raising.

The numbers: Star shares fell to 65 cents each after the company said it raised $565 million through a 1-for-1.65 pro rata rights entitlement plus an institutional placement, offering new shares at 60 cents each. It said about 67% of eligible investors took up the rights offer, with the balance placed to institutional investors. Star shares, which have lost more than two-thirds of their value in the past year, last traded at 75 cents ahead of Monday's trading halt.

The context: The retail component of the capital raising, which opens on 3 October, is expected to raise $185 million. Star is raising another $450 million via debt as part of a capital restructure after a massive $2.44 billion loss last month. The cash-strapped casino operator faces tax increases, multi-million dollar fines, and four shareholder class actions even as its casino licences in NSW and Queensland have been revoked after two inquiries exposed suspected money laundering, large-scale fraud and foreign interference at its casinos.