Hong Kong-listed real estate giant Far East Consortium has provided a detailed breakdown of its various loan and restructuring agreements with Australia’s Star Entertainment Group, adding that it remains confident in Star’s ability to repay a loan recently forwarded in relation to apartment sales at The Star Gold Coast.
The update follows confirmation in August that Star would offload its 50% stake in Queen’s Wharf Brisbane to its Hong Kong partners – Far East Consortium and Chow Tai Fook Enterprises – and in return assume the combined 67% stake currently held by the Hong Kong partners in two hotel and residential towers located at The Star Gold Coast.
As such, Far East Consortium and Chow Tai Fook will upon completion each hold a 50% stake in The Star Brisbane operator, Destination Brisbane Consortium, while Star will hold a 100% stake in The Star Gold Coast’s parent, Destination Gold Coast Consortium.
Star will in time also transition operations of the casino at The Star Brisbane to another operator, effectively ending any connection it has to the property.
In a Monday filing, Far East Consortium confirmed that the Hong Kong partners had during negotiations jointly forwarded to Star funding in the amount of AU$53 million (US$34.4 million) to fulfil urgent liquidity needs, of which they agreed AU$35 million (US$22.7 million) would take the form of an interest free loan as prepayment for proceeds to be generated from apartment sales in the Andaz hotel tower at The Star Gold Coast, and from drawdown of a hotel operating loan.
Far East Consortium noted in Monday’s filing that pre-sales of relevant apartments had begun, adding, “It is anticipated that the sale proceeds of Tower 2 (Andaz) and the hotel operating loan will not be less than AU$35 million, providing sufficient funds for full repayment of the loan.”
The remaining AU$18 million (US$11.7 million) cash payment to Star includes AU$10 million (US$6.5 million) under an implementation deed and another AU$8 million (US$5.2 million) not yet paid and that will be offset by an identical amount to be owed by Star to the Hong Kong partners in relation to a pedestrian footbridge at The Star Gold Coast that Destination Gold Coast Consortium is obliged to build. Star will assume full responsibility for that footbridge once it gains 100% control of the Gold Coast operations from its partners.
Notably, Star will under its agreement to offload its 50% stake in Destination Brisbane Consortium be entitled to ongoing earn-out payments in relation to the casino itself, although the exact amount of these repayments is yet to be determined.
“The mechanism for determining the Earn Out Payment and the Maximum Earn Out Payment are based on arm-length’s negotiation between the Joint Venture Partners and The Star,” Far East Consortium stated.
“As the Casino only commenced operations on 29 August 2024, and The Star will continue to operate it until a new operator is engaged, the parties recognize that the true value of the DBC-related assets may not yet be fully reflected at this stage.
“It is anticipated that it may require at least five years for the operations of the Casino to ramp up and demonstrate their full value. Consequently, the Joint Venture Partners have agreed to pay an earn-out to The Star, the amount of which will be contingent upon the future financial performance of Destination Brisbane Consortium.”
Far East Consortium noted that, upon completion of the agreements, it would ultimately dispose of its 33.3% stake in Destination Gold Coast Consortium and would acquire an additional 25% stake in Destination Brisbane Consortium, an additional 25% stake in the neighboring Charlotte Street Carpark and an additional 50% interest in Treasury Assets.
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