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The Star Entertainment Group (ASX: SGR) will need to repay $36.5 million to its Hong Kong partners after they agreed to renegotiate a deal concerning ownership of development assets in Brisbane and the Gold Coast.
Late last month Chow Tai Fook Enterprises and Far East Consortium International walked away from a heads of agreement (HoA) surrounding the sale of The Star's 50 per cent interest in the Destination Brisbane Consortium (DBC) behind Queen's Wharf.
The planned transaction was for a sale price of a $53 million cash payment, of which the partners paid $35 million upfront, and the Hong Kong companies handing over the keys to The Star for full control of the Destination Gold Coast Consortium (DGCC), which includes the Dorsett and Andaz hotels adjacent to the group's Gold Coast casino.
Soo Kim, the chairman of The Star's new US owner Bally's Corporation which alongside pubs baron Bruce Mathieson's Investment Holdings is pumping $300 million into the embattled business, has previously signalled an intent to keep The Star Brisbane asset and a stake in Queen's Wharf.
Over the weekend this was reaffirmed in an interview with the Australian Financial Review.
In late June The Star reported it was willing to continue negotiations with the joint venture partners, even though it had received a termination notice for the HoA with a termination date of today, 7 July.
This morning the parties agreed to extend the termination date to 31 July, based on an agreed set of principles "under which there will be certain departures from the HoA, subject to which the parties will now progress their negotiations with a view to finalising long form documents".
The extension was reached on the condition that The Star pay back $10 million of proceeds it received from the joint venture partners within 30 days, and a further $26.5 million within 60 days for its share of equity contributions made by the partners since 31 March.
SGR shares are down 1.92 per cent in early trading at 12.75 cents per share (cps).
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