Star seals deal to sell Queen’s Wharf in last-minute rescue

Hours after saying a deal had stalled, Star Entertainment Group has signed an agreement to sell its stake in Brisbane’s Queen’s Wharf to its Hong Kong joint-venture partners.

The Queen's Wharf complex in Brisbane. Picture: Steve Pohlner

Star Entertainment will sell its stake in Queen’s Wharf and other assets to its Hong Kong joint ­venture partners in an eleventh-hour, $53m deal that could stave off ­collapse.

The deal with Chow Tai Fook and Far East Consortium for the sprawling $3.6bn hotel and casino precinct on the Brisbane River will save about 2700 jobs and comes days before Star was due to run out of cash.

The company’s move to sell Queen’s Wharf for a fraction of what it cost to build underscores its desperation to raise cash and also jettison a project blighted by delays and cost overruns.

The sale will mean Star will avoid paying back half the $1.6bn of debt still owed on the precinct, but it has lost one of its biggest ­potential future money spinners.

The partners also will acquire the company’s Treasury Hotel and two car parks in Brisbane as part of the deal, according to a ­filing by Far East Consortium to the Hong Kong Stock Exchange. In return, Star will acquire the partners’ interest in aggregate in two hotel towers at its Gold Coast property.

Clockwise from top left: Star Entertainment CEO Steve McCann, Queen’s Wharf in Brisbane and coal baron Chris Wallin.

Star also announced it was seeking to finalise a $250m bridge funding facility and a refinancing proposal that had the potential to provide total debt capacity for the group of up to $940m.

Star CEO Steve McCann said the deal would contribute to “providing a potential pathway towards financial viability”.

“There are still a number of challenges that we need to address, including progressing short and long-term liquidity for the company,” Mr McCann said.

“While there is more to do to have access to the funding from the bridge facility and the refinancing proposal, these initiatives improve our capacity to have a viable future.”

The sale is not expected to solve all Star’s financial problems. It owes $430m to a syndicate of lenders and also faces a fine from anti-money laundering regulator Austrac that could top $300m.

In a joint statement, Chow Tai Fook and Far East Consortium said they were committed to keeping the precinct open “and that employees keep their jobs”.

“We acknowledge the impact that recent uncertainty has had on local employees and local small businesses, and we hope that this disruption can now end,” a spokesman said.

“We will work responsibly and collaboratively with the Queensland government, unions and all relevant stakeholders to finish construction and keep Queen’s Wharf open.”

The joint venture partners will pay Star $53m in cash, payable in several tranches – the first $35m was due on Friday. Star and its Queen’s Wharf employees will continue to manage the casino operations for a fixed monthly fee of $5m until March next year.

The agreement is subject to approval from Queen’s Wharf lenders, as well as obtaining the necessary government and regulatory approvals.

A spokesman for Queensland Attorney-General Deb Frecklington said the government had not received any formal submissions from Star in relation to a change to the ownership or management of any of its casinos. It is understood there are a series of regulatory steps that will need to be undertaken for a change in ownership to occur.

The Australian reported on Thursday that a $200m bridging loan had been offered to Star from Queensland coal billionaire Chris Wallin, founder of QCoal.

It is understood Mr Wallin put the deal on the table, but it was subsequently rejected by the board.

Both the NSW and Queensland governments are nervously watching the unfolding situation at Star, where more than 8000 people are employed across both states. A Star collapse would be the largest corporate failure since Virgin Australia crumpled under $4.8bn of debt in 2020.

The deal to offload Queen’s Wharf will still need approval from the Queensland government.

Star’s secured lenders are increasingly concerned they will take a big loss if they accept any new refinancing deal. They are reportedly resisting a $650m recapitalisation plan from US-based Oaktree Capital on fears they would accept too great a haircut.

Star shares were suspended by the stock exchange on Monday after the company failed to lodge its half-yearly accounts by last Friday’s deadline.

There is a limit to how many assets Star can jettison without risking the long-term future of the company in an increasingly tough sector.

Star told the stock exchange in January that its available cash at the end of December had fallen 46 per cent to $79m, a drop of $70m from September 30.

A fire sale of Star’s other assets, including properties in Sydney and on the Gold Coast, would leave the company as a pure ­casino company at a time when the sector is coming under increasing regulatory pressure, including carded play and bans on high-roller gamblers from Asia. Pubs baron Bruce Mathieson and Crown’s major investor Blackstone have been mentioned as possible buyers of those properties, especially if they can picked up for a steal.

Queen’s Wharf will eventually have 2714 hotel rooms and 108 food and beverage venues across 23 hectares of land, making it well positioned for the uptick in tourism expected in the lead-up to the Brisbane Olympics in 2032.

The precinct opened in August last year, almost two years behind schedule and with key retail and beverage offerings yet to open.

Star Entertainment reported losses of $1.69bn in 2024, after a loss of $2.44bn in the prior corresponding period.