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 (HOA) 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.”
In a filing of its own with the Hong Kong Stock Exchange, Far East Consortium said that, upon termination of the HOA, the parties are required to be restored to the position they were in immediately prior to entry into the HOA. This is to include Star repaying to its joint venture partners AU$10 million no later than 30 days after the termination date. If the amount is not repaid, Star will be required to instead transfer its 33.3% in one of the hotel towers at The Star Brisbane – Dorsett – to the joint venture partners. The partners will also no longer be required to make the AU$8 million third tranche of a balancing payment to Star.
The original HOA 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.
While that deal now looks dead in the water, Star did confirm Monday that it has now received AU$58 million formerly 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 notes 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.
