A Macau investor has built a 7% stake in Australian casino company Star Entertainment despite the firm rapidly running out of cash. [Image: Shutterstock.com]

The Star Entertainment, which controls three casino resorts across Australia, is on the brink of collapse as its cash reserves are now just AU$79m (US$49), a 50% decrease on the previous quarter.

If the cash burn rate remains on a similar course, then Star could be all out of funds by the end of February according to a Morningstar analyst. Reasons for the poor fortunes include recent hefty fines, tough trading conditions, and significant capital expenditure.

Star Entertainment’s share price has plummeted due to the ongoing uncertainty, from around AU$45 (US$28) in late September to AU$12 (US$7.42) after Tuesday’s trading.

Xingchun Wang initially spent AU$14m (US$8.7m) in September

One Macau investor is building a stake in Star, now controlling nearly 7% of the firm after committing over AU$38m (US$24m). Xingchun Wang initially spent AU$14m (US$8.7m) in September acquiring a position before increasing that last week.

While Wang doesn’t have any obvious links to the casino sector in Macau, the Australian Financial Review (AFR) reported he has ties to two Chinese companies with significant stakes in Star.

Australian laws dictate that individual shareholders can’t own more than 10% of a casino company without getting regulatory approval, with the AFR speculating that Wang and the two Chinese companies could now hold a combined stake of 20%.