The Star confirms Queen’s Wharf sale is on the cards after fielding offers from Hong Kong partners

Chow Tai Fook Enterprises (CTFE) and Far East Consortium (FEC) are looking to pick up The Star’s 50 per cent stake in the newly completed project, along with “other assets”, in a move that could give the company some breathing room amid an ongoing cash crisis and continued weakness in the group’s casino operations.

The latest development comes on the day that the Australian Securities and Investments Commission begins civil proceedings in the Federal Court against 11 current and former directors and officers of The Star for alleged breaches of their duties in relation to anti-money laundering responsibilities emerging from the Bell inquiries.

However, The Star’s board has affirmed that it is not interested in selling its interest in the Destination Brisbane Consortium at any price.

“The board of The Star has assessed each of the CTFE and FEC proposals received to date, and after careful consideration (which has included external advice) concluded that none of the proposals have provided sufficient value for The Star,” says the company in a statement to the ASX this morning.

“The Star continues to engage with CTFE and FEC to ascertain whether a sale of The Star’s 50 per cent interest in DBC (Destination Brisbane Consortium) can be negotiated on terms satisfactory to The Star.

“There is no certainty that any transaction will be concluded.”

Destination Brisbane Consortium is the joint venture through which The Star operates its new Brisbane casino-hotel complex which opened late last year. The Star secured $1.6 billion in debt funding for the project in mid-2020 with the loan at the time locked in for a period of 5.5 years.

Chow Tai Fook and Far East Consortium are also partners in the company’s massive redevelopment program currently under way at The Star Gold Coast, which has progressed to construction of a second residential apartment tower.

The Star Brisbane is a source of a continued strain on resources for The Star which revealed in its FY24 annual report that its share of joint-venture equity contributions to Destination Brisbane Consortium is estimated at $174 million in FY25 and $183 million in FY26.

This is in addition to further equity contributions needed to fund operational costs as the business ramps up.

In a mixed earnings performance revealed in a December-quarter update last month, The Star Brisbane generated revenue of $121 million during the quarter, producing EBITDA of $14 million.

Under the agreement with its Hong Kong partners, The Star Brisbane’s financial results are reported by Destination Brisbane Consortium with The Star recognising its operator fee as revenue while corporate costs are allocated to the property as the associated expense.

The group’s Queensland operations are likely to take an earnings hit in the current quarter as The Star begins implementing mandatory carded play, betting pre-commitments and cash limits, legislation for which was passed by the state government in March last year. The move follows NSW legislation already in place at The Star Sydney.

Meanwhile, The Star reiterated today that it “continues to explore possible liquidity solutions”.

“While discussions continue with respect to a range of different solutions, there is no certainty that any of these discussions or negotiations will result in one or more definitive arrangements that might materially increase the group's liquidity position,” says The Star.

“In the absence of one or more of those arrangements, there remains material uncertainty as to the group's ability to continue as a going concern.”

In its latest asset disposal, The Star last month announced the $60 million sale of The Star Sydney Event Centre to Foundation Theatres which counts Sydney’s Capitol Theatre, Sydney Lyric and Foundry Theatre among its venues.

The Star’s shares were trading 1.5c higher at 12.5c at 10.47am (AEDT).