Star Entertainment soars after securing Queen's Wharf exit
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The news: Embattled casino operator Star Entertainment has entered an agreement to exit its 50% stake in the Queen's Wharf casino and entertainment complex in Brisbane to joint venture partners Chow Tai Fook Enterprises and Far East Consortium, after a deal appeared to collapse earlier this month.
The numbers: Star shares rocketed 18% to 10.5 cents at 11:20am AEST after emerging from a trading pause this morning.
Under the terms of the new agreement, Star will receive $53 million in cash, of which $45 million was already paid in March.
Star will not be required to fund an equity contributions from the Hong Kong-based joint venture partners, which had amounted to over $212 million since 31 March.
Chow Tai Fook Enterprises and Far East Consortium will obtain Star's 50% equity interest in the Brisbane resort, as well as Star's other Brisbane-based assets comprising a 50% interest in the Charlotte Street Car Park, and 100% interests in the Treasury Brisbane Hotel and Treasury Brisbane Car Park.
Star will acquire the joint venture partners' 66.6% interests in the Dorsett Hotel and Andaz Hotel, taking its stake in both Gold Coast assets from 33.3% to 100%.
Management of the Brisbane resort will be transitioned to a replacement operator, pending regulatory approval. Star will no longer receive an operator fee from the Queen's Wharf casino, but instead receive a fixed monthly fee of $5 million until 30 June 2026, $6 million from 1 July 2026 to 30 June 2027, and $7 million from 1 July 2027 to 30 June 2028.
Star is also entitled to an earn-out payment in the 2030 calendar year of up to $225 million, based on the lower of $225 million or 50% of the resort's pro forma equity value.
The context: A binding heads of agreement was announced in March and long form documents between Star and the joint venture partners for the transaction were required to be entered into by 30 April.
However, the deal fell apart after Chow Tai Fook and Far East Consortium issued a termination notice in June. Star told investors it was considering alternative options earlier this month.
