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The Star Entertainment Group’s (ASX: SGR) plans to sell its interest in the $3.6 billion Queen's Wharf development in Brisbane have come undone after its Hong Kong partners in the project gave notice that they plan to tear up the agreement next week.
Chow Tai Fook Enterprises and Far East Consortium International, with which The Star has also partnered for the development of residential towers at the group’s Gold Coast casino property, have been unable to reach agreement on “outstanding commercial issues” related to the deal.
Today’s announcement follows The Star’s shareholders last week approving a $300 million investment by US gaming giant Bally's Corporation and pubs baron Bruce Mathieson's Investment Holdings to keep the company afloat.
While The Star says it is continuing to pursue its planned Brisbane exit, today’s development plays into the hands of Bally’s Corp chairman Soo Kim who has previously indicated his desire to hold onto The Star Brisbane and keep the group’s property portfolio intact.
The heads of agreement signed by the Destination Brisbane Consortium (DBC) partners in March was subject to long-form documentation being signed by the end of April.
Since that deadline has lapsed, either party has the right to terminate the sale agreement which would have seen The Star offload its 50 per cent interest in the consortium for $53 million cash while gaining full control of the Gold Coast assets developed by the partners.
“Since the recent general meeting, the parties have continued to negotiate with a view to finalising the long-form documents but, as of this morning, have not reached an agreement on the outstanding commercial issues,” says The Star.
“This morning, The Star received from the joint-venture partners a notice to terminate the heads of agreement which will become effective five business days from today, unless withdrawn earlier.”
The Star has revealed that the deal to sell its share in the Queen’s Wharf project will terminate on Monday 7 July 2025.
“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,” says the company.
The Star announced in March that it had already received an advance of $35 million from its Hong Kong partners from the proposed sale.
Meanwhile, the company today revealed that the $58 million proceeds from the sale of The Star Sydney Event Centre have been released from escrow, while it has also received $133 million in funding from Bally's Corporation and Investment Holdings. The remaining $67 million from Bally’s is due in October.
The Bally’s deal, which comprises a multi-tranche convertible note and subordinated debt instrument, was approved last week by more than 99 per cent of shareholders.
Once all the notes are converted, Bally’s and Mathieson’s Investment holdings will assume a majority stake in The Star comprising 61 per cent of issued capital – with Bally’s controlling 37.8 per cent.
In the meantime, Bruce Mathieson Jnr and Bally’s chairman Kim can attend The Star’s board meetings as invitees.
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