Announced today (March 7), Star is selling its interest to Far East Consortium and Chow Tai Fook, both of which are its partners in the wider joint venture (JV). Star will receive AUS$35 million (US$22 million) for the Queen’s Wharf stake.
An immediate cash payment of $35 million would seem to secure the group’s future. Its shares were suspended from Australia’s ASX earlier this week after it failed to publish its latest results due to a lack of liquidity.
Star published details of the deal in response to reports in the Australian media that a sale was close. The group in February confirmed it was in talks over a possible disposal.
In line with the agreement, Star will no longer be required to make equity contributions to Destination Brisbane Consortium (DBC) from March 31. Star estimated making $212 million in future contributions to the project.
Following completion, Star will no longer own any assets in Brisbane. It will also transfer the Treasury Hotel, Treasury Car Park and its 50% equity interest in the Charlotte St Car Park to the JV partners.
Star will continue to operate Star Brisbane during a transitional period until March 2026. Its operator fee will be replaced by a fixed fee of $5 million a month until June 2026 and $6 million thereafter.
Gold Coast Consolidation for Star
Also included in the deal is Star taking ownership stakes in certain assets on the Gold Coast. These will be acquired from the JV partners as part of the exchange.
Star will acquire the 66.6% interest in the Dorsett (Tower 1) and Andaz (Tower 2) hotels on the Gold Coast. It will also secure the management rights for Dorsett hotel after a further period of management by Far East Consortium.
In addition, it retains rights to future development for three additional towers in the region. All this, Star said, consolidates its position on the Gold Coast.
Completion of the transaction is subject to the entry into long form documentation by April 30.
“This is a step in the right direction for Star,” said Steve McCann, group CEO and managing director of Star. “There are still a number of challenges that we need to address. These include progressing short and long-term liquidity for the company.
“We remain focused on the remediation of the business and restoring our reputation as a suitable licensee at both Star Gold Coast and Star Sydney.
“The company still faces various risks, including the availability of funding, the ability to restore our licences – including implementing our remediation plan and various regulatory reforms relating to carded play and cash and time limits – maintaining support from stakeholders, resolving the various litigation and claims from historical issues and managing the business in a period of continuing lower revenue and negative cashflow.”
Star pursuing additional funding
Also in relation to future financing, Star today confirmed it has entered documentation for a senior secured $250 million bridge facility.
Separately, the group has entered an exclusivity and process deed relating to a refinancing proposal. This, it said, has the potential to provide total debt capacity of up to $940 million.
On top of this, Star is pursuing various short-term liquidity initiatives as neither the bridge facility proceeds nor the refinancing proposal will be available to address its immediate liquidity requirements.
