The Star Entertainment Group has sold a 50 per cent stake in The Star Brisbane entertainment precinct as it works to stave off collapse.
Far East Consortium, one of the group's joint venture partners in the development of the wider Queen’s Wharf precinct in Brisbane, told the Hong Kong Stock Exchange on Friday (March 7) that it, alongside jewellery giant Chow Tai Fook, was buying The Star’s stake.
It will buy the Brisbane casino for a $53 million in cash, payable in tranches, with the first starting at $35 million. It will also transfer its 66.7 per cent equity interest in The Star casino at Broadbeach on the Gold Coast to the The Star Entertainment Group.
It was a fraught day for the group. Earlier in the day it denied media speculation that it had secured a buyer for its stake in Destination Brisbane Joint Venture, which owns The Star Brisbane integrated resort.
But Far East Consortium told the HKEX later that day that it would acquire the stake, giving it total ownership of the Queen’s Wharf precinct.
The Star agreed to terminate the casino management agreement but continue to provide management services for a fixed monthly fee of $5 million until June of 2026, and thereafter $6 million per month.
The group announced in February that it was in discussions with precinct joint-venture partners Chow Tai Fook and Far East Consortium with the intention to sell its stake in the casino and resort to them.
Chow Tai Fook and Far East Consortium are facing their own financial issues when apartment contracts for their 800-unit Queen’s Wharf Residences were broken.
The cancellations came about due to “unheralded cost increases and [issues with] supply chains” and led to them seeking a 12.5 per cent price increase on the apartments, which were largely sold in the first weeks of their 2022 launch.
The beleaguered Star Entertainment Group has faced reputational and financial collapse in recent months, admitting in its half-year update made at the end of February that it was “continuing to explore possible liquidity solutions”.
The group has refused to finalise and release its half-yearly report to the ASX, saying it was waiting for liquidity proposals given that there remained material uncertainty of the group’s continuation as a going concern.
This meant that the company’s shares were suspended from trading. They are yet to be reinstated.
Insolvency group FTI has reportedly been briefed to assume management control of the company in case of administration.
