Last Monday, The Star told shareholders the two buyers of its 50 per cent stake in Brisbane’s $3.6 billion Queen’s Wharf development had issued a notice to terminate the Heads of Agreement (HoA) which kickstarted the sale in March.
The end of the agreement was due to take effect today, leaving the path forward for The Star unclear as it struggles with financial uncertainty.
However this morning, The Star announced that the termination of the HoA had been pushed out until the end of the month and the three stakeholders in the sale were working to reach an agreement by July 31, with “a set of principles under which there will be certain departures from the HoA”.
The Star along with buyers, Chow Tai Fook Enterprises and Far East Consortium, are attempting to finalise official documents which would make the sale of The Star’s Queen’s Wharf investment a reality.
The long form documents were originally supposed to be completed by April 30, following the announcement of the deal in principle in early March.
Between them, Chow Tai Fook Enterprises and Far East Consortium already own the other half of Queen’s Wharf.
If an agreement is not reached by the end of July, The Star will be on the hook to pay $10 million to the other two parties in the sale, as well as an anticipated $26.5 million in equity payments for the ongoing development of Queen’s Wharf which is still not finished nor fully open.
As part of The Star’s Queen’s Wharf exit, the business will acquire full ownership of The Star Gold Coast, in addition to $53 million in cash, of which it has already received $45 million.
The sale would also release The Star from further payments towards Queen’s Wharf, which it had calculated would be in the vicinity of $212 million.
The Star has been warning of a dire cash position all year, but pulled off a separate deal to secure a $300 million liquidity injection from Bally’s Corporation and Investment Holdings in late June, with shareholders agreeing to the investment in return for the two companies gaining a combined ownership of more than 60 per cent of the company.
The business also offloaded its Event Centre in Sydney to Foundation Theatres earlier this year for around $60 million. That sale has been finalised.
Before The Star’s variety of moves this year, the company controlled a significant footprint of event space and hotel inventory across Sydney, Brisbane and the Gold Coast.
Its event space has already been diminished by the sale of its Sydney asset, while the sale of its Queen’s Wharf share creates uncertainty about what will become of the Events Centre there, currently run by The Star Brisbane. By exiting Queen’s Wharf, it will also relinquish control of a significant portion of its hotel rooms, however, The Star will gain full control over the inventory on The Gold Coast, including future developments for The Star Gold Coast.
