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Two of Australia's largest casino operators have announced pay cuts for CEOs as staff are stood down across the board to manage costs during Covid-19.
Star Entertainment Group (ASX: SGR) and Crown Resorts (ASX: CWN) have stood down around 12,355 staff cumulatively to manage operating costs.
To reflect the sacrifices made by staff, Star has reduced non-executive director fees by 50 per cent and CEO Matt Bekier's salary by 40 per cent.
Star's properties have been shut down since Monday 23 March and will remain closed until gathering restrictions are lifted.
As a result the company has had to reduce expected group capital expenditure for both FY20 and FY21.
To see the period through, Star has executed an additional debt funding facility with existing relationship banks for $200 million.
Including the new facility Star has available cash and undrawn debt facilities of around $700 million, which the company says will provide sufficient liquidity for an extended shutdown period.
Star estimates monthly expenditure at its properties will be around $10 million, comprising payments to employees who are not stood down, asset security, technology and other fixed costs.
"The Star is implementing necessary and wide-ranging measures to strengthen the balance sheet and preserve liquidity in the current exceptional circumstances," says Bekier.
"The shutdown continues to have a significant impact on our people and their families, and the group welcomes the Australian Government's support, particularly the JobKeeper Payment program. Our focus remains on preserving the group's solid financial position and operating flexibility to resume operations quickly when the current Covid-19 restrictions begin to lift."
Crown Sydney construction continues
Construction of the Crown Sydney Hotel Resort will continue as planned and remains on track for completion by the end of 2020.
The project cost remains unchanged at approximately $2.2 billion. During the build 1,300 construction staff have been employed and once completed the company expects more than 2,000 people to work in the hotel.
Crown has agreed to terms with three relationship banks for a $450 million project finance facility to support the continued construction of Crown Sydney.
The unwavering commitment to the build comes as Crown CEO and managing director Ken Barton has taken a 20 per cent reduction in fixed remuneration until 30 June 2020.
The company has progressively stood down on either a full or partial basis approximately 95 per cent of its employees, representing more than 11,500 staff.
The casino business has agreed to provide an ex gratia payment of two weeks' pay to those full-time and part-time employees that have been stood down and a lump sum payment of $1,000 to eligible casual workers.
Crown expects its underlying operating costs to reduce between $20 million to $30 million per month during the Covid-19 crisis.
"We have taken the tough but necessary decision to stand down a large number of our employees," says Crown CEO Ken Barton.
"We are continuing to investigate ways in which we can support our employees on an ongoing basis. Crown welcomes the Commonwealth Government's JobKeeper scheme, which will be critical in keeping our business and our employees connected."
Like Star, Crown has also entered into new debt facilities with its banks for a total of $560 million.
The company's current cash balance of approximately $500 million, in addition to Crown's ability to secure more than $1 billion in extra debt facilities, means the company is confident it will make it through this period of market destabilisation.
"As a result of today's announcement, Crown is well placed to withstand an extended period of closure," says Barton.
Crown will pay its FY20 interim dividend on 17 April 2020.
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