Star Entertainment Group’s Hong Kong partners, Chow Tai Fook Enterprises Limited and Far East Consortium International Limited, have given notice of their intention to terminate an agreement that would have seen them acquire a combined 100% stake in the Queen’s Wharf Brisbane development – now known as The Star Brisbane.
Star currently holds a 50% stake in the integrated resort with Chow Tai Fook and Far East Consortium holding 25% each as part of the Destination Brisbane Consortium (DBC) joint venture.
Just days after Star shareholders approved an AU$300 million rescue package from US casino operator Bally’s Corp and Bruce Mathieson’s Investment Holdings Pty Ltd, the company revealed that it has now received notice from its Hong Kong partners that they wish to terminate the Heads of Agreement signed in regard to The Star Brisbane in March. The termination will become effective next Monday 7 July.
Star said in an ASX filing that the parties had been unable to enter long form documents by the required date, having failed to reach an agreement on commercial issues despite ongoing negotiations in recent weeks.
However, it added, “Despite the receipt of this notice, The Star remains willing to continue negotiations with the Joint Venture Partners to give effect to the DBC transaction.
The original Heads of Agreement signed in March was to have seen Chow Tai Fook and Far East Consortium acquire Star’s 50% stake in The Star Brisbane as well as its share of outstanding debt, with Star to continue operating the casino under an initially short-term management agreement.
Star was to subsequently acquire its joint venture partners’ interests in two hotel and residential towers – Dorsett and the soon-to-open Andaz – at The Star Gold Coast, lifting its current 33.3% interest in each tower to full ownership.
Star did not provide in Monday’s ASX filing any update on the status of a AU$35 million (US$22 million) cash injection it received from Chow Tai Fook and Far East Consortium upon the original agreement being announced in March – a time when it was desperately short on liquidity,
The company did, however, confirm that it has now received AU$58 million being held in escrow following the recent sale of The Star Sydney Event Centre plus another AU$133 million from Bally’s Corp and Investment Holdings. Both payments had been conditional on shareholders approving the rescue package that will see Bally’s and Investment Holdings issued convertible shares for a combined 57% stake in Star.
Inside Asian Gaming this week spoke with Bally’s chair Soo Kim about the shareholder vote, with the veteran executive promising that he won’t let stakeholders down in helping turn the company’s fortunes around.
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