Star offered $200m lifeline from coal baron as Queen’s Wharf traded to HK partners

Chris Wallin who made his fortune in Queensland coal offers Star financing to ensure it can survive long enough to see through a Queen’s Wharf sale to Far East Consortium and Chow Tai Fook.

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

Troubled Star Entertainment Group has been offered a $200m bridging loan from Queensland coal miner Chris Wallin to tide the embattled casino operator over and ensure its survival.

Star is close to sealing a deal to sell its stake in Queen’s Wharf in Brisbane to Hong Kong-based partners Far East Consortium and Chow Tai Fook in a deal that could reap up to $50m for cash-starved Star. But it is facing insolvency if it cannot solve its funding crisis soon enough to secure thousands of jobs at Queen’s Wharf.

It is understood the private QCoal boss is offering the short term funding while Star can negotiate the sale to its joint venture partners, buying the company more time to come up with a turnaround strategy and potentially sell off other assets to avoid calling in administrators.

Stockbroker Ord Minnett is linked to the last-minute offer.

The move comes as lenders show fierce resistance to accepting a $650m recapitalisation plan from Oaktree Capital, where $200m of the funds would be used to repay debt and the remainder to run the business.

The lenders are worried they would be accepting too great a haircut.

Star chief executive Steve McCann is expected to greenlight the Brisbane casino sale in the coming days. It is unclear who would hold the casino licence for Queen’s Wharf.

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

The company’s survival increasingly depends on it nailing down the rescue plan within days with speculation that Star may have less than a week’s worth of cash left.

Star owes $430m to a syndicate of lenders and also is on the hook to pay back half the $1.6bn of debt on the Queen’s Wharf hotel and casino complex development.

Star revealed in February that it had been approached about the sale of its 50 per cent stake in Queen’s Wharf to its partners.

At the time, Star said it had concluded that none of the proposals provided sufficient value for the company. The phased opening of the $3.6bn project in Brisbane’s central business district had faced cost over runs of at least $260m and an opening date more than a year behind the original schedule. It would be selling at a fraction of the cost of building the precinct;

Star has already offloaded several other assets in a desperate bit to stay afloat, including the old Treasury casino in Brisbane and an event centre in Sydney.

A spokesman for Queensland Attorney-General Deb Frecklington said the state’s Office of Liquor and Gaming Regulation remained in contact with Star, but no formal submission had been received. Until Star outlines its proposal, the fate of the gaming licence and operation of Queen’s Wharf’s gaming floors is unknown.

While selling the stake in Queen’s Wharf could give Star some breathing space, the company is facing other looming financial challenges. Star could cop a fine of as much as $300m in an action against it by federal anti-money laundering regulator Austrac.

The Australian’s DataRoom reports that tension has been building behind the scenes in recent days between Star’ advisers and the casino operator’s lenders over their refusal to accept recapitalisation plans, including that put forward by Oaktree Capital Management.

Star CEO Steve McCann against background of empty Queen's Wharf casino.

Morningstar analyst Angus Hewitt warned this week that without a financial lifeline, Star’s suspended shares were unlikely to trade again.

There is growing frustration that Mr McCann and his team did not move more quickly to stave off disaster.

Star reported 2024 losses of $1.69bn after $2.44bn in red ink in the prior corresponding period, as it continued to battle regulatory costs and challenging trading ­conditions.
Mr McCann warned last year the company was looking to slash up to 350 jobs and offload hotels and other assets after warning the company was “on its knees.”

Star employs more than 8000 workers across NSW and Queensland who could be thrown out of their jobs if it collapses.

The sale of Queen’s Wharf could spark a fire sale of Star’s other assets that include properties on the Gold Coast and Sydney. Pubs baron Bruce Mathieson and Crown’s major investor Blackstone have been mentioned as possible buyers of those properties. That would essentially leave Star has 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.

Queensland Premier David Crisafulli this week appeared to wash his hands of the company, telling the media that: “I’ve lost no sleep over the company called Star. I think a lot about the workers, though, and my non-negotiable is that they stay in a job.”

He said no financial assistance would be provided to Star but flagged co-operation with a future owner to ensure the doors are kept open at Queen’s Wharf and Star Gold Coast.

The NSW government has declined to comment on its plans to support workers if Star collapses but says it is closely monitoring the situation.

The Australian Securities and Investments Commission meanwhile is continuing its case in the Federal Court against former executives and directors of Star over alleged breaches of money laundering controls.

Former chief executive Matt Bekier told the court Thursday that Macau-based junket operator Qin Sixin was a “suitable person to do business with” despite the company having a report on his earlier arrest on money laundering charges.

Originally published as Star offered $200m lifeline from coal baron as Queen’s Wharf traded to HK partners