It’s not often you talk about a gaming floor and a coal-fired power station in the same sentence, but Alinta Energy and The Star Entertainment Group are connected in a way more than you might think.
A third of the Alinta Energy business is for sale through RBC and UBS, and any deal involves the buyer taking Alinta’s coal-fired power station in Victoria’s Latrobe Valley.
The owner of that business is Chow Tai Fook, based in Hong Kong.
Meanwhile, Chow Tai Fook is also Star Entertainment’s joint venture partner on the $3.9bn Queen’s Wharf development in Brisbane that has debts of $1.6bn.
Chow Tai Fook’s sister company is New World Development, which is struggling financially in Hong Kong and has needed to undertake a restructure, hence the move to get cash through the door from a sale of Alinta.
What it means for Star Entertainment is that if the listed casino operator thinks it can gain any sort of financial lifeline or support from its joint venture partner it’s an unrealistic prospect, further fuelling expectations of the casino company’s collapse.
A way out for Star could be if it can quarantine the Brisbane project, although that’s an unlikely option as it is costing billions before it is yet to generate any meaningful income.
New World Development has debt of $HK200bn ($41bn) and a debt-to-equity ratio of 110 per cent, so it’s clearly stretched.
Meanwhile, it’s going to be tough going for advisers on the Alinta ticket, because attempts have been made to sell all of the Chow Tai Fook-owned business before, and there were no strong buyers due to groups being hesitant about its coal exposure.
And, this time it’s also expected to be few buyers for a stake in the business that includes Loy Yang B.
When Chow Tai Fook tried to sell the business in 2023, Goldman Sachs, UBS and Lazard were involved.
It ended up selling just its power stations, solar farm and gas pipeline to APA Group for $1.8bn.
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