ASX SGR: Star Entertainment sells Brisbane Treasury Casino site to Griffith University in scramble for cash
Embattled casino operator Star Entertainment has confirmed that the deal to offload its troubled Queen’s Wharf casino in Brisbane to its Asian partners has collapsed, leaving the group exposed to a loss-making asset and further investment in the operation. In NSW and Victoria, the casinos have been required to introduce “cashless gaming” systems. Both casinos facilitated money laundering, particularly via junket operators, organisers of casino visits by high rollers. Unfortunately, many of these people had strong links to organised crime gangs keen to launder their illegally acquired money.
Star Entertainment needs to show the market it has the funding needed to stabilise its underperforming casino business while also fixing the probity issues that have left the company’s retention of its Sydney casino licence in doubt. It would enable the company to shed an AU$1.4 billion (US$900 million) debt obligation, secure a monthly AU$5 million (US$4 million) operating fee for managing the Brisbane casino, and refocus resources on its other core assets in the Gold Coast and Sydney. Without effective reform of local gambling venues and online wagering, casinos may try to mount an argument for less effective regulation. It’s also a powerful argument to speed up the transition of effective regulation to all gambling operators. Certainly, overcapitalisation of new developments has played a part in casinos’ struggles.
The Queensland LNP government released a sensitive report into Star’s Brisbane casino business partner. The ASX-listed casino giant remains in talks with Hong Kong-based investors Chow Tai Fook Enterprises and Far East Consortium about the sale of its stake despite the parties failing to reach an agreement after months of negotiations. Star Entertainment is scrambling to offload its 50 per cent stake in the Queen’s Wharf hotel and casino complex after an initial deal to sell out imploded at the eleventh hour.Australia’s Star Entertainment Group is cutting up to 40 senior staff from its books as it looks to cut costs ahead of US casino firm Bally’s Corp officially taking control of the company, according to a report by the Australian Financial Review. "The situation for Star workers in terms of this current financial crisis dates back to September of last year, but for many Star workers, they've been dealing with Star's uncertainty for two to three years." The casino group could be broken up in the process, as JeetCity casino VIP tiers administrators would search for buyers for individual assets, if the company can't be rescued as a whole. The future of Star Entertainment and its thousands of workers remains uncertain as the company's efforts to secure a financial lifeline go down to the wire. Notably, Star will under its agreement to offload its 50% stake in Destination Brisbane Consortium be entitled to ongoing earn-out payments in relation to the casino itself, although the exact amount of these repayments is yet to be determined. Star will in time also transition operations of the casino at The Star Brisbane to another operator, effectively ending any connection it has to the property.
"We saw the news on Friday that they were starting to sell the assets off one at a time," he said in an interview from Denver, Colorado. Soo Kim is the chair of the US casino giant Bally's and is offering a financial lifeline to cash-strapped Star Entertainment. In the short time he has been in Brisbane he has already found things to fix — like improving signage to make it easier for people to flow through the property, and the sound of gaming machines on the casino floor. Bally’s Corporation has become known for rescuing struggling casinos and its CEO said all 20 of their assets were distressed at some stage. Instead, he is the man in charge of a US gaming giant worth $737 million USD — which is poised to finalise a deal to take control of Star Entertainment and attempt to save it.A comprehensive restructuring of Star was already expected given past comments by Bally’s Chairman Soo Kim around the need to install a new executive team. Kim also told Inside Asian Gaming in a video interview that he was desperate to inspect Star’s financials given the sizeable losses the company has endured since a review of Star’s suitability in 2022 saw the company’s casino license suspended. The potential collapse of the company puts the jobs of about 9,000 workers across its three casinos on the line. Shares in struggling casino giant Star Entertainment have plummeted on Friday after a brief trading halt was lifted, as the company searches for a financial lifeline to avoid collapsing. The company, which operates casinos in Brisbane, the Gold Coast and Sydney, confirmed on Monday morning that it would not be able to lodge its accounts until it secured a funding package. Exchange operator ASX automatically suspended shares in Star on Monday morning after the casino operator missed Friday's deadline for issuing its earnings update for the first half of the financial year.
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