The Star Entertainment Group (The Star) has confirmed rumors reported by Casino.org that it would divest its 50% stake in The Star Grand Brisbane, which opened last August.
The embattled Australian casino giant announced that, pending regulatory approval and other conditions, it will sell its Brisbane property to its two largest shareholders, Chow Tai Fook Enterprises and Far East Consortium. The stake in the A$1.6 billion casino resort complex in Queen’s Warf along the Brisbane River is being sold for A$53 million, a A$3 million premium over the previously reported amount. Star said Chow Tai Fook and Far East provided A$35 million today to offer the firm “near-term liquidity.”
This divestment will relieve The Star from further equity contributions to pay down the A$1.4 billion debt from The Star Brisbane’s construction.
Star Needed Quick Cash
Reports suggested that The Star could run out of cash as soon as this weekend, leading the company to urgently seek quick cash. Along with Chow Tai Fook and Far East, The Star secured a A$250 million loan from New York-based alternative investment giant King Street Capital Management. The senior secured bridge loan features an annual all-in interest rate of 15%, paid monthly, with up to 10% payable in kind. While Australian billionaire Chris Wallin had offered The Star an A$200 million loan, that offer never materialized.
In addition to the Brisbane sale and bridge financing, The Star announced it received a debt refinancing proposal of A$750 million from an additional potential lender, with due diligence inquiries to be completed by March 18. The lender was not named.
“I would like to thank our team for their efforts and our stakeholders for their support regarding the important matters we announced today,” said Steve McCann, CEO and managing director of The Star Entertainment Group. “This transaction is an important milestone for the company and contributes to providing a potential pathway towards financial viability.”
Star’s Demise
The company’s downfall stemmed from government inquiries in Queensland, where it operates The Star Gold Coast, and in New South Wales, where The Star Sydney is located. These inquiries revealed that Star, like its Australian rival Crown Resorts, failed to protect its casinos from being used by criminal syndicates for money laundering. The company was also accused of welcoming gamblers from China and allowing players banned in one Australian state to gamble at its casinos in another state.
Looking Ahead
McCann believes today’s transactions position The Star for future success, despite many challenges ahead.
“We are excited about our future on the Gold Coast. We will have almost 1,200 hotel rooms at the Gold Coast following the opening of the five-star Andaz Hotel in late 2025. We believe that once we optimize these operations and our strategy, our full ownership of these hotels will enhance our integrated offering and provide an opportunity to improve the performance of the business. The receipt of cash funding will provide additional support in the near-term as we focus on implementing additional liquidity measures and seek to execute a comprehensive company refinancing,” McCann detailed.
Though the organization “still faces various risks,” McCann said Star’s immediate focus will remain on its implementation plan “to restore our licenses.”
