Just when you thought it was over, The Star Entertainment Group has managed to secure a binding long-form documentation with its Destination Brisbane Consortium (DBC) and Destination Gold Coast Consortium (DGCC) joint venture partners for its Queen’s Wharf Brisbane project exit.
Struggling to navigate its exit from Brisbane for the past couple of months, The Star has finally entered into binding long-form documentation with Chow Tai Fook Enterprises Limited (CTFE) and Far East Consortium International Limited (FEC).
The agreement concerns the DBC regarding the Queen’s Wharf Brisbane Resort, the DGCC regarding its Gold Coast joint venture assets, as well as other assets in Brisbane that The Star owns or partially owns.
Superseding previous agreements that were part of the transaction, including the heads of agreement, which was terminated earlier this month, the new transaction will see The Star dispose of its DBC interest, consolidate its Gold Coast position and transfer other Brisbane interests and assets to the joint venture partners.
Brisbane exit
The Star will divest its 50% DBC stake to help consolidate its Gold Coast position for an AUS $53m fee. Equity contributions were set at $212m, alongside a substantial debt obligation of $1.4bn.
However, with its exit, the operator will no longer be required to fund any equity contributions, and it will be released from its parent company guarantee concerning its debt facility share. The resort’s management will also be transferred to a replacement operator once a replacement has been identified and received regulatory approval.
The Star must also comply with certain transaction protocols, and the casino operator fee will be restructured, including certain escrow arrangements. The DBC exit must be completed by 30 November 2025.
All-in on Gold Coast
As for the DGCC, The Star will acquire two hotels from its Gold Coast Joint Venture Partners, taking its stake in the Dorsett Hotel and Andaz Hotel from 66.6% to 100%. It will also fund all equity contributions required for the DGCC and obtain the Dorsett Hotel management rights after a further FEC management period of up to five years.
Alongside retaining its Gold Coast future development rights, The Star will also have exclusive development rights over towers four and five, in addition to a $20m option to remove the joint venture partners’ entitlement to participate in the development of tower three.
Regarding other Brisbane assets, the joint venture partners will acquire The Star’s 50% stake in Charlotte Street car park and its 100% stake in Treasury Brisbane hotel and car park.
The operator will retain its responsibility for footpaths and public realm works surrounding the Treasury Casino building, as well as the Treasury Brisbane hotel and car park, which has an estimated cost of $13m to $17m, while the joint venture partners will be liable for other Treasury hotel and car park obligations and liabilities.
The DGCC, Treasury Brisbane and other assets have a sunset date of 31 March 2027.
The Star also mentioned that it is entitled to an earn-out payment of up to $225m in 2030, which is based on the lower $225m or 50% of DBC’s pro forma equity value.
Bally’s seal of approval
For the transaction to be completed, approval from the lenders of all participants, as well as the Queensland Government, must be received. The Star has already received the approval from its subordinated lenders, Bally’s Corporation and Investment Holdings, for the transaction.
Within its recent Q2 financials, Bally’s commented on its strategic capital investment of $200m into The Star, initiated in April and approved by The Star’s shareholders in June.
Robeson Reeves, CEO of Bally’s, commented: “The opportunity to acquire a significant equity stake in Star is consistent with Bally’s historical and proven strategy to deploy capital and disciplined financial practices in underperforming operators to seek to create value for Bally’s shareholders.”
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