Hope dims for The Star as Hong Kong deal collapses
The Star's rescue deal with Hong Kong joint venture partners has collapsed after the company failed to meet contractual deadlines to resolve commercial issues.
Key points:
– Heads of Agreement deal struck with Hong Kong investment group in March has collapsed
– The Star has not met contractual deadlines that would have finalised the AU$53m (US$34m) funding package
– It will now have to repay funds received from the joint venture partners
The Star Entertainment Group has let the Australian Stock Exchange know that a deal agreed in principle with a Hong Kong investors group has collapsed.
With the well-publicised burden of debt on its shoulders, a AU$53m funding package announced in March seemed as though it may relax some of the pressure on the Australian gambling and entertainment company.
It appears that while the ‘binding heads of agreement’ (HoA) were agreed back in March with joint venture partners, Chow Tai Fook Enterprises and Far East Consortium International, The Star has been unable to fulfil the terms that would finalise the long form documents of the deal.
The deal was going to see The Star offload its 50% equity interest in the Destination Brisbane Consortium and 1/3 equity interest in Destination Gold Coast Consortium, along with other assets.
A deadline was set in the initial HoA, by which point an agreement on various commercial details had to be concluded for the documents to be finalised.
Despite an unsuccessful attempt to extend the window, the deadline has passed as of 31 July, resulting in the termination of the HoA.
Since the HoA was agreed, The Star has received AU$10m of proceeds from its joint venture partners, which now must be repaid by 6 August 2025.
Those joint venture partners have also been making equity contributions to DBC since the end of March on behalf of The Star, and all of these funds, approximately AU$31m, must also be paid back.
Good to know: A refinancing proposal proposed by Salter Brothers Capital which could have addressed some of The Star’s liquidity issues was also withdrawn in April 2025
If The Star finds itself unable to make the required payments back to the joint venture partners, it could be forced to hand over its 1/3 interest in Tower 1 Hotel at the Gold Coast.
The Star will now have to reassume responsibility for its own equity contributions to DBC, which the announcement document puts at around AU$200m, a figure that could yet increase.
The ASX Announcement made by The Star has laid bare the depth of the company’s financial issues, though it also reveals that it is continuing to engage with the joint venture partners and will provide an update if any accord can be struck.
Another sequence of ASX announcements in April will have given hope to shareholders, with the reveal of AU$300m worth of investment coming from Bally’s and AU$100m coming from The Star’s largest shareholder Bruce Mathieson.
The deal, which would give Bally’s a controlling stake of the ailing Australian casino group, does not yet have regulatory approval and it remains to be seen whether these developments will have any effect on those proceedings.
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