(Corrects timing of shareholder approval to this month)
By Shivangi Lahiri and Rishav Chatterjee
Australia’s Star Entertainment said on Monday that its Hong Kong-based investors had threatened to imminently withdraw from a deal for Brisbane’s new Queen’s Wharf casino and hotel complex, sending its shares 7 per cent lower.
Chow Tai Fook Enterprises and Far East Consortium each hold a 25 per cent stake in the Brisbane development and agreed in March to acquire the remaining 50 per cent.
The deal is set to be cancelled in five business days, according to a notice to terminate from the Hong Kong firms.
The notice comes after Star’s shareholders this month approved an A$300 million rescue package that will allow the embattled casino group to remain operational. The rescue bid is being led by U.S. casino firm Bally’s Corp and the Mathieson family, which is Star’s largest existing shareholder.
Star said it had been negotiating with the Hong Kong firms since its June 25 annual general meeting but had not reached an agreement on “outstanding commercial issues.” It remains willing to talk with them, it added.
Chow Tai Fook and Far East each own 2.8 per cent of Star and also own a combined two-thirds of Star’s Gold Coast property. Star’s main casino is in Sydney.
In recent years, Star and Blackstone-owned larger rival Crown Resorts have been the subject of multiple regulatory inquiries into violations of anti-money laundering rules that have sapped their allure for high roller visitors. They were also hit hard after the pandemic brought lengthy closures and froze tourism.
Far East said in a separate statement on Monday that Star must repay A$10 million ($6.5 million) or forfeit its remaining third stake in the Gold Coast casino within 30 days of the Brisbane deal being terminated.
The potential termination of the Queen’s Wharf deal marks a major setback for Star which has with the Hong Kong firms poured in significantly more capital than expected to complete the project. The project now carries some A$1.6 billion in debt.
Star’s stock snapped four straight days of gains and ended 6.9 per cent lower at A$0.135.
($1 = 1.5314 Australian dollars)
