The Star Entertainment has agreed to sell all of its assets in Brisbane, Australia, in return for full ownership of key Gold Coast assets.
The troubled casino operator said the deal “should improve” its EBITDA and group CEO and managing director, Steve McCann, labelled the move a “step in the right direction.”
The Star’s binding heads of agreement with Chow Tai Fook Enterprises and Far East Consortium International, the joint venture partners in the Destination Brisbane Consortium, will see the two companies take The Star’s 50 per cent equity stake in the Treasury Brisbane Car Park, Treasury Brisbane Hotel and Charlotte St Car Park.
In return, The Star will increase its ownership of the Dorsett (Tower 1 Hotel) and Andaz (Tower 2 Hotel), from 33.3 per cent to 99.9 per cent by acquiring the joint venture partners’ remaining 66.6 per cent stake in the gaming and non-gaming assets on Broadbeach Island, Gold Coast.
Both assets are set to open in the second half of 2025.
McCann said: “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 five-star Andaz Hotel in late 2025 and believe that once we optimise 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.”
More importantly in the short-term, the deal grants The Star an upfront cash payment of AU$53m, with $35m received on Friday, March 7.
“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,” McCann said.
The Star’s shares have been suspended after it failed to file its latest results on time.
The delay has been caused by liquidity concerns and there have been reports that Bally’s Entertainment is eyeing up a deal to help the casino operator out.
The Star’s deal for the hotel ownership on the Gold Coast is key because the company’s casino licence suspension in the region has been deferred until the end of March this year.
The Queensland government had initially planned to suspend The Star Gold Coast’s licence from December, but it gave the company time to “address significant outstanding remediation matters,” including addressing issues raised in the findings and recommendations of the second Bell report.
In addition, the appointment of Nicolas Weeks, the special manager for The Star Gold Coast, has been extended to June 30, 2025.
“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,” McCann said.
The deal for the Brisbane assets has a transitional period until March 31, 2026, which can be extended by Chow Tai Fook Enterprises and Far East Consortium International.
The Star will no longer receive the operator fee provided for under the Brisbane assets agreement. Instead, it will receive a fixed fee of $5m per month until June 30, 2026, and $6m per month thereafter, while any operator fees beyond March 31, 2026, are subject to extension(s).
As well as the $35m The Star will receive from the joint venture partners, $10m is payable by March 31, 2025.
A further $8m is payable by the earlier of November 30, 2025, and when the Andaz recapitalisation occurs on practical completion of the hotel.
