Australia’s Star Entertainment Group will relinquish its 50% stake in The Star Brisbane while offloading all related debt as part of a binding heads of agreement entered into Friday with its Hong Kong joint venture partners, Chow Tai Fook Enterprises and Far East Consortium.
Under the terms of the deal, which includes termination of its casino management agreement for the property, Star will receive an up-front cash payment of AU$53 million (US$33 million) aimed at supporting the company’s immediate liquidity needs, plus a fixed fee of AU$5 million (US$3.2 million) per month as part of a transitional period during which Star will continue to provide casino management services through March 2026. It may also receive up to AU$225 million (US$142 million) in future consideration from an earn-out mechanism in respect of The Star Brisbane.
Perhaps most significantly, the agreement solves a chunk of Star’s debt problems with the company no longer required to make any further equity contributions to the Destination Brisbane Consortium (DBC) joint venture partnership after 31 March 2025. Star had expected its future equity contributions to DBC to total at least AU$212 million (US$134 million) plus any additional equity contribution that may have been required as part of the refinancing of the AU$1.4 billion (US$883 million) DBC debt facility, maturing in December 2025.
While Star will completely exit the Brisbane integrated resort development, the agreement boosts its exposure at The Star Gold Coast where it will acquire its joint venture partners’ interests in two hotel and residential towers – Dorsett and the soon-to-open Andaz. As a result, Star’s interest in each will increase from 33.3% to full ownership.
This, Star explained, means it now has full ownership of all gaming and non-gaming assets at The Star Gold Coast, which “will enhance The Star’s customer offering and provide further depth to its accommodation mix on the Gold Coast.” Star also retains all rights to future development of the site which may include up to three additional towers under the company’s Gold Coast Masterplan.
Star said it had received AU$35 million (US$22 million) in cash from its joint venture partners on Friday which it intends to use for short term liquidity purposes as it seeks to implement other liquidity initiatives.
In a separate filing on Friday, Star revealed it has also entered into documentation for a senior secured AU$250 million (US$158 million) bridge facility, plus an exclusivity and process deed relating to a refinancing proposal which it says could provide total debt capacity for the group of up to AU$940 million (US$593 million).
The bridge facility is with funds managed by global investment firm King Street Capital Management and aims to provide additional liquidity for the group while it seeks to secure sufficient liquidity to implement a longer-term refinancing of its existing senior debt.
Assuming the approval of lenders and regulators, the facility requires Star pay an annual all-in interest rate of 15%, paid monthly in arrears, while retaining a minimum liquidity covenant of AU$10 million (US$6.3 million) available cash, among other conditions precedent.
In relation to the additional debt refinancing proposal, Star said it would, if realized, provide sufficient liquidity to refinance all of the group’s existing corporate debt, with a quantum of AU$750 million (US$473 million) and an ability to pay interest-in-kind for a period of time such that the proposal would have the capacity to provide up to AU$940 million.
The lender has undertaken due diligence enquiries and engaged in preliminary discussions with governments and regulators in relation to the refinancing proposal, Star explained.
In announcing the transaction, Star’s Group CEO and Managing Director Steve McCann said, “This transaction is an important milestone for the company and contributes to providing a potential pathway towards financial viability. Our team has worked hard to deliver The Star Brisbane and establish a new precinct for Brisbane. We are grateful for the efforts of all of our employees and we will work with our joint venture partners and the regulator to transition to a new casino operator in due course.
“We are excited about our future in the Gold Coast. We will have almost 1,200 hotel rooms at the Gold Coast following the opening of the 5-star Andaz Hotel in late 2025 and 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 putting in place additional liquidity measures and seek to implement a whole of company refinancing.
“This transaction is a step in the right direction for The Star. There are still a number of challenges that we need to address, including progressing short and long-term liquidity for the Company. We remain focused on the remediation of the business and restoring our reputation as a suitable licensee at both The Star Gold Coast and The Star Sydney.
“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, both for the company and its stakeholders.
“We are now focused on implementing these proposals, including continuing our engagement with governments, regulators and existing lenders to seek their support for our plan. We also remain focused on implementing our plan to restore our licences.
“The company still faces various risks, including the availability of funding, the ability to restore our licences (including implementing our remediation plan and various regulatory reforms relating to carded play and cash and time limits), maintaining support from stakeholders, resolving the various litigation and claims from historical issues and managing the business in a period of continuing lower revenue and negative cashflow.
“I would like to thank our team for their efforts and our stakeholders for their support in relation to the important matters we announced today.”
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