Australian casino operator The Star Entertainment Group Ltd says it “remains willing to continue negotiations” with its Hong Kong-based joint venture partners about selling to them the 50-percent equity interest in the Destination Brisbane Consortium (DBC) they do not already own.
DBC is the developer of Queen’s Wharf Brisbane (pictured), in the capital of the Australian state Queensland. The complex houses Star Entertainment’s The Star Brisbane casino complex.
Were Star Entertainment not to repay some money advanced to it by the Hong Kong partners under a heads of agreement on the previously-proposed stake sale, then the Australian firm would have to transfer its one-third interest in a tower at Queen’s Wharf Brisbane.
Far East Consortium International Ltd – one of the joint-venture partners in DBC – confirmed in a Monday morning filing in Hong Kong before trading hours that it was terminating a heads of agreement deal on buying half of Star Entertainment’s 50 percent stake in DBC.
Star Entertainment outlined in its Monday filing to the Australian Securities Exchange that privately-held Chow Tai Fook Enterprises Ltd – the other Hong Kong entity in the original joint venture – was also pulling out of purchasing a half portion of Star Entertainment’s DBC stake.
The Australian casino group stated in its Monday update: “Despite the receipt of this notice, The Star [Entertainment] remains willing to continue negotiations with the joint venture partners to give effect to the DBC transaction.”
It added: “The Star will provide an update when there are further material developments with respect to its negotiations with its joint venture partners, including if any termination of the heads of agreement takes effect.”
An asset swap deal was also part of the heads of agreement: Star Entertainment would acquire the two Hong Kong investors’ combined 66.67 percent stapled equity interest in a Gold Coast project in Queensland. The Hong Kong investors are also minority shareholders in Star Entertainment.
Far East had stated in a March 7 filing that it and Chow Tai Fook would, under the deal, provide to the Australian casino operator AUD53 million (US$34.7 million currently) in cash, payable in several tranches.
For its part, Far East stated in its Monday update that on that day it and Chow Tai Fook had given Star Entertainment formal notice of termination of the heads of agreement, which would take effect on July 7.
As a result, said Far East, casino group Star Entertainment would be “required to repay to the joint venture partners – in equal shares – a total of AUD10 million… no later than 30 days” from the date of termination.
If not, Star Entertainment would “be required to instead transfer” its “33.3 percent interest in Tower 1 (Dorsett),” at Queen’s Wharf Brisbane, to the joint venture partners.
On June 25, Star Entertainment shareholders approved a AUD300-million rescue package, which the firm said would allow it to remain operational. The deal will ultimately allow United States-based casino firm Bally’s Corp to receive a controlling stake in Star Entertainment.
