The Star Entertainment Group’s Hail Mary attempt to improve its cash flow and offload its interests in the Queen’s Wharf development has been dashed as further details of its financial woes emerge.
It told the ASX on August 1 that the deal with its joint-venture partners for the site, Chow Tai Fook Enterprises and Far East Consortium, had officially failed.
The deal was initially made in March, but The Star received notice from the partners in late June that they wanted to terminate the agreement.
While The Star Entertainment Group confirmed that the parties were still in negotiations in its quarterly report, it also acknowledged that no deal had been made because of “outstanding commercial issues” that prevented the finalisation of its agreement.
The group proposed an extension to August 6, but this was not accepted, and a termination notice, which was extended to July 31, has now taken effect.
The writing was on the wall after the announcement in June—now, The Star has revealed the details of the failed agreement.
It told the ASX that it will retain its 50 per cent interest in the Destination Brisbane Consortium, Destination Gold Coast Consortium and other assets.
Previously outlined terms for the deal said The Star group would divest its interest in Queens Wharf to the Hong Kong consortium in exchange for $53 million and its interest in The Star Gold Coast.
The Star must also repay $10 million it received from the JV partners by August 6 and must reimburse the JV for its share of equity contributions to the Destination Brisbane Consortium, expected to be in the region of $31 million.
If it is unable to repay, then The Star must transfer a third of its interest in Tower 1 hotel at the Gold Coast—the Dorsett Hotel—to the JV partners.
The JV partners are also required to reimburse The Star for equity contributions made to the Destination Gold Coast Consortium since March—about $1 million.
Meanwhile, The Star will also continue to be responsible for its share of future equity contributions to the Destination Brisbane Consortium, estimated to be $200 million, and it will retain management of the casino.
The Star group said it was considering what alternative options may be available to it in relation to its 50 per cent equity interest in Destination Brisbane.
The collapse of the agreement leaves The Star in a sticky situation. As well as its mounting bills, regulatory cases are in the works that put its licenses in jeopardy, even after US gambling giant Bally’s Corporation provided a cash injection this year.
Its quarterly results for the final three months of the 2024-2025 year showed an EBITDA loss of $27 million, which was blamed on a “challenging operating environment”.
It pulled in revenue of $270 million, a 31 per cent decline on the same quarter last year.
