Star's Brisbane casino has been in the headlines for months: What's the latest?
It's the latest development in a long and complex tale of financial woe for the company which began during the construction of Queen's Wharf, got much worse after findings of misconduct, and have now reached crisis point thanks to a plummeting share price and bank balance.
In November 2017, 20,000 square metres of Brisbane's CBD was torn down in preparation for the new Queen's Wharf precinct, a joint venture between Star Entertainment Group, Chow Tai Fook Enterprises, and Far East Consortium.
In all, the casino, four hotels, retail venues and restaurant spaces would cost an estimated $3.6 billion — Queensland's biggest ever infrastructure project.
Shortly after work began, Star's share price opened at just over $5 — a record high.
Then came two years of pandemic lockdowns, major flooding, and an outbreak of mould — to name but a few issues — which added hundreds of millions to the price tag and many months to the timeline.
Originally planned for 2022, the precinct wouldn't open until August 2024.
"Queen's Wharf became a drain because, as a 50 per cent joint venture, Star was on the hook for huge capital contributions and a big chunk of the project's $1.4 billion debt," Graeme Hughes from Griffith University's business school said.
These problems might have been manageable, according to Mr Hughes, if Star wasn't also dealing with the fallout from a 2021 investigation by Australia's financial intelligence agency, AUSTRAC and the New South Wales Independent Casino Commission (NICC).
"Star's deep-seated problems really began with widespread failures in anti-money laundering compliance," Mr Hughes said.
These breaches led to The Star losing its casino licences in both New South Wales and Queensland, the appointment of a manager, significant fines from state regulators, and a looming penalty from AUSTRAC, reportedly up to $400 million.
In September 2021, when the NICC first announced it was looking into Star Entertainment, its share price was $3.50.
By the time its new Brisbane casino opened on August 29, 2024, that had plummeted to 57 cents a share, making it difficult for the company to raise funds and keep its new business operating.
The following day a second NICC report was published, which found The Star was still unsuitable to hold a casino licence.
At the time of writing, Star shares are trading at 13 cents.
In January this year, the company told the ASX it had just $79 million left in available cash and had burned through $70 million since the end of September.
In March, desperate for money to stave off insolvency, Star agreed to sell its 50 per cent stake in Queen's Wharf to its joint venture partners Chow Tai Fook Enterprises and Far East Consortium for $53 million.
As part of the agreement, Star would keep the rights to operate the casino.
"This was meant to free up around $700 million in debt and $212 million in future contributions, making Star more asset-light and boosting its liquidity," Mr Hughes said.
Just a few days later, Star reached a deal with US casino giant Bally's for at least $250 million in exchange for a controlling stake in the company.
Star's largest individual shareholder, Bruce Mathieson, offered an additional $50 million if Bally's came on board.
But just when things appeared to be improving for Star, their joint venture partners suddenly announced they were terminating the agreement to buy Queen's Wharf, effective July 7.
On Monday, the company notified the ASX that the deadline for termination has now been extended to July 31st.
Reaching a deal, Mr Hughes said, is of "existential" importance to Star.
"Bally's chairman Soo Kim has openly stated that their $300 million investment is contingent on Star's solvency," he said.
If Star Entertainment was to fall into administration, those administrators would take control of Star's assets, including Queen's Wharf, and its liabilities.
Associate Professor David Morrison, an expert in insolvency law from the University of Queensland, said Star's stake in Queen's Wharf could be sold and the property leased back to them.
"There would be an agreement between the new partner and Star as to how to deal with the property, but if Star are holding firm on the value they think they bring to the table, then buyers will be thin on the ground, especially in this market.
"A buyer would have to be comfortable with a company in Star's circumstances to be a joint landlord and take the risk of default under the agreement."
The Queensland government has indicated it wants a casino to continue operating at Queen's Wharf but won't offer financial support or concessions to Star.
"Let the regulatory authorities do their job and let Star tell the taxpayers what they want and what will be returned.
"If lenders are nervous then taxpayers ought to stay out of it."
Mr Hughes said if Star was forced to sell the rights to operate a casino, buyers were circling.
"Bally's and the Mathieson family would be prime candidates to scoop up remaining assets cheaply," he said.
"Other global casino giants like MGM Resorts, Caesars Entertainment, or private equity firms could also be interested in acquiring a distressed Australian casino portfolio.
"Blackstone, which owns rival Crown, has also been mentioned, though regulatory hurdles for a near-monopoly would be immense."
As for Queen's Wharf, he said Chow Tai Fook and Far East Consortium were "logical" choices.
"The Queensland government would then conduct a rigorous process to license a new, financially sound, and compliant operator for the casino."
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