Despite efforts by besieged casino and resorts group Star Entertainment to water down media speculation it had reached an agreement to offload its 50% interest in the new Star Brisbane complex to its two joint venture partners, fresh, albeit unconfirmed updates, suggested the deal was signed on Friday.
Once an announcement confirms the unofficial tip-off from the casino operator's insiders today, JV partners Hong Kong's Chow Tai Fook Enterprises and Far East Consortium are expected to get what they always wanted: Full control of the new Queen's Wharf casino, arguably the jewel in Star's trove of assets.
Prior to today's deal, both JV partners held a 25% stake each in the Brisbane complex.
However, given that the deal still requires the consent of the Queensland government, which has it hands full today with cyclone Alfred, an official announcement from Star's management may not be forthcoming today.
While today's bailout may save countless jobs at the casino, further rounds of funding will be needed to ensure the stock can continue trading over the longer term.
Meanwhile, shares in the stock have not traded since the company failed to sign off on its financial accounts last Monday.
While Star has been allowed to operate within safe harbour provisions, it's understood that Chow Tai is facing financial issues of its own.
Here's what we wrote earlier today…
The company was referring to an article in which the Australian Financial Review (AFR) reported that Chow Tai Fook Enterprises and Far East Consortium were close to agreeing to an injection of up to A$50 million (US$31.5 million) as part of a plan under which they would take control of the Brisbane casino and resort.
Star told the Australian Securities Exchange (ASX) that it noted recent media speculation including the article published online in the AFR.
The company said that as announced to the ASX on 10 February it had been in discussions with its partners about a possible disposal of its 50% equity interest in the Destination Brisbane Joint Venture which owns The Star Brisbane integrated resort, also known as Queens Wharf.
“The Star has been unable to reach an agreement with its Joint Venture Partners,” Star said in the ASX announcement.
The AFR reported Star was close to sealing a deal to sell its stake in Queen’s Wharf to hand control to its partners but was facing insolvency if it could not solve its funding crisis.
Star also did not directly comment on a report in the Australian newspaper that Queensland coal baron Chris Wallin had offered Star a $200 million bridging loan to give it time to sell the Brisbane complex and potentially other assets to avoid calling in administrators.
It also wrote that Star Chief Executive Steve McCann was expected to approve the Brisbane casino sale in the coming days.
Star disclosed in January that it had just $79 million of cash at 31 December and last month the company raised doubts about its ability to continue as a going concern.
Trading in Star shares was suspended last week after the company, which also owns casinos in Sydney and on the Gold Coast, failed to lodge its financial accounts, with the last sale occurring at 11 cents, capitalising the company at $316 million.
This is just over 6% of the peak valuation almost a decade ago. This is before sentiment was soured by allegations of money laundering and failure to prevent criminal activities, along with operational and financial challenges.
