Australia’s Star Entertainment is selling its half-share in a Brisbane entertainment complex to its Hong Kong partners for A$53 million (S$44.3 million) in a last-minute bailout for the cash-strapped casino group.
Star has been trying to navigate mounting pressures to avoid voluntary administration. Its ASX-listed shares have been suspended because it has not published half-year results.
The company said on Friday (Mar 7) that it would sell its 50 per cent stake in its Queen’s Wharf project in Brisbane to Far East Consortium International and Chow Tai Fook Enterprises. The casino and hotel complex was developed for A$3.6 billion, Star’s website says.
It received payment of the first A$35 million tranche on Friday, Star said.
In a separate statement, the company said it had entered into a A$250 million bridge facility with King Street Capital Management and received a separate refinancing proposal from another lender with the potential to provide total debt capacity of up to A$940 million.
Star said it was pursuing other short-term liquidity initiatives because neither the bridging facility nor the refinancing proposal will be available to address immediate requirements.
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“While there is more to do to have access to the funding from the bridge facility and the refinancing proposal, these initiatives, together with the agreement to exit Destination Brisbane Consortium and expand our operations at the Gold Coast, improve our capacity to have a viable future,” Star CEO Steve McCann said.
For years, Star and larger rival Crown Resorts, owned by Blackstone, have faced multiple inquiries into violations of anti-money laundering rules and subsequent legal actions.
Star has poured millions of dollars into compliance upgrades and new systems to restore its battered reputation and secure casino licences. Those costs and weaker consumer discretionary spending have hit the firm hard.
Star said in February it had received an A$650 million refinancing offer from US debt investor Oaktree. It said on Friday that certain conditions of the Oaktree proposal have not yet been met and the offer has not been finalised.
Far East Consortium and Chow Tai Fook Enterprises will become the sole owner of the Brisbane venture, which has luxury hotels and restaurants and other amenities.
Star will, in turn, take on the investors’ 66.67 per cent stake in a Gold Coast project in Queensland.
Far East said the deal was reliant on clearing regulatory hurdles, including obtaining consent of the Queensland state government, and foreign investment review approval.
“The Queensland government has not received any formal submissions to consider a change to the ownership or management of The Star’s casinos in Brisbane or the Gold Coast,” a spokesperson for the state attorney-general said.
A representative of the Foreign Investment Review Board was not immediately available for comment. S&P announced on Friday it would remove Star from the S&P/ASX200 index on March 24. REUTERS
