Rewrites paragraph 1, updates with further details on background and context throughout, adds analyst reaction in paragraph 6 and shares in paragraph 5

By Shivangi Lahiri and Rishav Chatterjee

Dec 16 (Reuters) - Star Entertainment’s SGR.AX CEO Steve McCann will be stepping down, the Australian company said in a surprise announcement on Tuesday, after guiding the beleaguered casino operator through a prolonged stretch of acute financial turmoil.

Bruce Mathieson Jr., who was appointed as chair earlier in the month, will be taking on additional executive duties.

The move cements the billionaire Mathieson family’s grip on Australia's No. 2 casino operator after the family and U.S. gaming group Bally’s Corp BALY.N converted their rescue loans into equity. The U.S. company now controls about 38%, while the Mathieson family has a 23% interest.

Shares in the firm rallied as much as 4.8% to A$0.11 on Tuesday.

"I think this is good news for investors because it means they can look forward to new blood at the helm. There are hopes that Bruce can potentially help lift investor confidence, and this is evidenced by Star shares rising today," said Jessica Amir, a market strategist at moomoo.

Star has been at the centre of sweeping upheaval across the domestic sector, marked by regulatory probes, casino closures and a wave of senior executive departures.

A challenge confronting Star’s controlling shareholders is a potential financial crime watchdog penalty stemming from failures to comply with anti-money laundering laws.

McCann took over in July 2024 as Star was fighting for survival, charged with steering it through an inquiry into its suitability to run the Sydney casino while rebuilding a leadership team depleted by high-profile departures .

His tenure was dominated by talks with lenders and investors, refinancing efforts, asset sales and repeated warnings over Star’s ability to continue as a going concern, amid tighter gambling rules and falling revenue.

Star said it will launch a search for a permanent CEO, while McCann will remain available to assist the firm until July 8, 2026.

(Reporting by Shivangi Lahiri and Rishav Chatterjee in Bengaluru; Editing by Alan Barona and Harikrishnan Nair)

((shivangi.lahiri@thomsonreuters.com))