Star Entertainment's Brisbane casino deal collapses; shares hit record low
The collapse of the Queen's Wharf deal marks a major setback for the Australian casino operator, which is on the brink of bankruptcy following a string of regulatory probes over the past two years that drove patrons away and left it with a mounting debt pile.
Star will now have to repay the investors, Far East Consortium and Chow Tai Fook Enterprises, A$41 million, which includes proceeds and equity contributions invested in the project, by September 5 after they failed to reach consensus on the stake sale.
"The parties have been unable to reach agreement on a number of outstanding commercial issues," the casino operator said in a statement, opens new tab, adding that the partners refused a last-ditch effort to extend the negotiations by a week.
That leaves Star responsible for future equity contributions to the project of about A$200 million, and may need to inject additional equity when the project's debt facility of A$1.4 billion comes up for refinancing in December.
Shares in the embattled Australian casino operator tanked more than 17% to their record low of 9.1 Australian cents per share earlier in the day. They were last trading at 9.4 cents apiece, as of 0417 GMT.
"The A$1.4 billion debt refinancing of the DBC (Destination Brisbane Consortium, name of the JV) due in December looms as a make-or-break moment for The Star, if it can survive that long," said John Lockton, head of investment strategy at MST Financial.
"The Star's cash flow continues to wither, and the back and forth over commitments only muddies the picture further."
($1 = 1.5547 Australian dollars)
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