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Star’s Queen’s Wharf deal fails, facing $41 million in costs
Star Entertainment fails to sell its Queen’s Wharf precinct in Brisbane to its partners, Chow Tai Fook Enterprises and Far East Consortium, and has to pay $41 million.
The deal collapsed after both sides failed to reach an agreement on the necessary commercial terms. This leaves Star with its existing 50% stake in the $3,6 billion project through the Destination Brisbane Consortium (DBC), along with a 1/3 interest in the Destination Gold Coast Consortium.
Parties agreed that if a full agreement isn’t reached by July 31, Star Entertainment has to pay $41 million to its former partners. Further, the operator stays responsible for its share of the $1,4 billion DBC debt facility. In addition, Star has to invest around $200 million to keep the Brisbane project stay afloat financially.
Chow Tai Fook Enterprises and Far East Consortium formally withdrew from the agreement after rejecting Star’s last-minute proposal. Star tried to extend the end date to August 6, but was unsuccessful.
To make matters worse, if Star Entertainment fails to pay $10 million it previously received from partners, and refund $31 million in equity contributions made to DBC since March, its 1/3 stake in the Dorsett hotel tower on the Gold Coast will be taken over.
After the deal’s collapse, Star’s shares went down 9,1%, trading at 10¢. This reflects investor concerns about the financial implications of the failed sale and the company’s ongoing obligations.
Crown Resorts was a preferred candidate to replace Star in the Queen’s Wharf precinct due to its recent success in meeting stringent probity and compliance standards required by regulators in other Australian states. If successful, this would mark Crown’s first expansion into Queensland.
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