3 months ago
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Embattled casino operator Star Entertainment has confirmed the deal to offload its troubled Queen’s Wharf casino in Brisbane to its Asian partners has collapsed, leaving it exposed to a loss-making asset and further investment in the operation.
Star confirmed on Friday morning that the deadline to renegotiate the sale of its 50 per cent stake in Queen’s Wharf to Chow Tai Fook Enterprises and Far East Consortium has passed with no progress from the parties.
“As of this morning, the parties have been unable to reach an agreement on a number of outstanding commercial issues which in turn prevent the finalisation of long form documents,” Star said in a statement to the ASX.
The Star Casino and Queens Wharf complex in the Brisbane CBD.Credit: Glenn Campbell
Star will be forced to repay more than $36 million to its consortium partners between now and September, but the bigger issue is how it will shoulder its share of future equity contributions and the consortium’s debt.
Star’s cash levels have been bolstered to $234 million by recent asset sales, and an equity injection from US group Bally’s and interests associated with major shareholder Bruce Mathieson.
Star is also awaiting the outcome of a court decision on fines for breaches of anti-money-laundering regulations that is expected to be in the hundreds of millions of dollars. Star’s lawyers told the Federal Court last month that fine of more than $100 million may trigger the group’s financial collapse.
When Star announced the Brisbane deal in March, it helped the casino operator avoid financial collapse, with the consortium partners offering to pay $53 million for Star’s 50 per cent share and hand over other real estate assets in Queensland.
Earlier this week, Star released its quarterly report, which precedes audited financial accounts due next month, states that it made a loss before interest, tax, depreciation and amortisation costs of $27 million for the quarter ending June 30, on revenue of $270 million.
The casino operator said mandatory carded play at its flagship Sydney casino requiring all patrons to have a physical card – either The Star Club membership or a Player Card – plus $5000 cash limits have continued to drag on its gambling performance, with average daily revenue down 17 per cent since it was introduced in August last year.
