ATM owner Stargroup pulls the plug after debt talks fail

ATM group Stargroup has called in the receivers after failing to restructure debt.

Last week company secretary Sungki Lee told Stockhead the company had “some debt which the board would like to see decrease”.

It’s understood Stargroup (ASX:STL) had total debt of $9.5 million. The company’s market cap is about $13 million.

Today subsidiaries Star Payment Systems, Stargroup Investments and Star ATM were sent into receivership. Stargroup has eight directly controlled subsidiaries in total.

Chief executive Todd Zani told Stockhead a secured creditor was owed “about $6.5 million” in total by the three subsidiaries.

A $6.5 million loan from Sydney Credit Provider Loan with an interest rate of 10.5 per cent a year was supposed to be repaid by the end of September.

But there is also another $3 million owed to an unsecured creditor.

It’s understood that a party is supporting and funding the wider business, however.

Mr Zani says the major banks removing ATM fees was not the cause of the debt struggles.

Richard Tucker and John Bumbak of KordaMentha Restructuring have been appointed as receivers.

“The receivers and managers will commence an immediate process to seek expressions of interest to sell or recapitalise the business,” StarGroup told investors.

Last month StarGroup reassured shareholders that a move by big banks to eliminate ATM fees would not affect its revenue.

Worried investors sent StarGroup’s (ASX:STL) shares down by a third after the big banks announced the move.

Mr Zani told investors at the time he was “not really” surprised by the level of selling.

“What this has probably emphasised is that there is still a significant number of investors on our register that don’t understand the fundamentals of our business,” he said.

“That is something that we will have to continue to educate the market on and in particular, the niche in the market that we operate within.”

StarGroup — which charges fees around $2.50 for use of its ATMs — placed its machines as far as possible from bank ATMs in areas such as pubs, clubs and service stations, he said.

“Bank customers have always been able to obtain cash for free from their own ATMs, and we have always suggested that as a result of our machines being located in convenient locations like pubs, clubs, nightclubs, 7-eleven stores, service stations, remote sites and other similar locations — usually where banks are not interested in locating their devices — we are insulated in the event of bank policy changes.”