Star Entertainment secures a $53 million lifeline
Star Entertainment has secured a $53 million lifeline as it looks to stave off collapse. To secure the financing, the casino must sell off its 50 per cent stake in its new Brisbane casino.
Star has reached an agreement with its Queen's Wharf Brisbane development partners, Far East Consortium International and Chow Tai Fook Enterprises, to exchange its 50 percent stake in the Brisbane project for their two-thirds interest in the Gold Coast development.
Far East Consortium confirmed the deal in a filing to the Hong Kong Stock Exchange on Friday. Star's shares remain suspended from trading on the ASX until it releases its half-year financial results.
Prior to the suspension, Star's share price had fallen to 11 cents, with the company's financial challenges putting around 9,000 jobs at risk.
Star Entertainment operates casinos in Sydney, Brisbane, and on the Gold Coast and has faced scrutiny from multiple state-level inquiries and royal commissions over the past five years. These investigations have centred on concerns regarding money laundering and organised crime associations.
Specifically, findings have indicated that Star allowed individuals linked to organised crime, to conduct gambling operations within its facilities, leading to a determination of "unsuitability" to hold a casino license.
The company is currently facing legal action from the Australian Securities and Investments Commission (ASIC), which alleges that Star's board and directors did not adequately address the risks of money laundering and criminal associations.
Furthermore, ASIC has required Star to allocate $150 million as a contingency for potential fines related to separate proceedings by the Australian Transaction Reports and Analysis Centre (AUSTRAC).
The company's financial pressures have been compounded by cost overruns associated with the Queen's Wharf development, which it has now agreed to divest. The project, initially budgeted at $3.8 billion, experienced significant cost increases.
Star has also been navigating regulatory changes, including restrictions on gambling limits and cash transactions, which have impacted revenue. Financial analysts have reported a cash burn rate of up to $100 million per quarter.
Jonathan Jackson, 10th March 2025
