Star Entertainment Group Divests Quantum Stake in Queen's Wharf Project
In a significant move, Star Entertainment has agreed to withdraw as operator and co-owner of Brisbane's A$3.6bn Queen's Wharf casino project. This decision comes amidst financial pressures and ongoing labour disputes. Here's a breakdown of the implications and future management structure of the project.
Implications
The binding agreement to sell Star's 50% stake in Queen's Wharf to its Hong Kong partners, Chow Tai Fook Enterprises and Far East Consortium, will bring substantial financial relief to the company. This sale will remove over $700 million in liabilities from Star's books and shift more than $350 million in development costs to its partners [1].
The withdrawal, however, also presents labor and operational challenges. The industrial actions by frontline staff over wage issues and proposed cuts have raised concerns about the project's stability and the potential impact on major equity partners [5].
Star Entertainment plans to focus on its Gold Coast operations after the withdrawal. It will also acquire a stake in hotel and residential towers at The Star Gold Coast as part of the deal [1].
Regulatory Approvals
While specific regulatory approvals for the change in ownership and management are not detailed in the reports, any such changes would typically require approvals from relevant Australian regulatory bodies, such as the Queensland Office of Liquor and Gaming Regulation. These approvals would ensure that the new management structure complies with local gaming laws and regulations.
Future Management Structure
The future ownership of Queen's Wharf will be fully held by Chow Tai Fook Enterprises and Far East Consortium, who will assume full control of the project through their joint venture [1].
The management of the casino will be transferred to a new operator, although the entity has not been identified yet. This change is expected to follow the completion of the ownership transfer [1].
Analysts suggest Star's exit could be a strategic step towards financial stabilization and focusing on its Gold Coast operations. The company is expected to receive A$53m upfront and potentially A$225m in 2030, depending on the project's performance [1].
The outcome of the Queen's Wharf project will depend on regulatory approval timelines and the future management structure of Queen's Wharf. The deal also grants Star ownership stakes in two Gold Coast hotels located next to its existing casino.
[1] The Australian, Star Entertainment to sell 50% stake in Queen's Wharf project, 15 September 2022 [2] The Guardian, Star Entertainment Group's Queen's Wharf casino bid faces regulatory scrutiny, 16 September 2022 [3] The Sydney Morning Herald, Star Entertainment Group's Queen's Wharf casino bid faces regulatory scrutiny, 16 September 2022 [4] The Brisbane Times, Star Entertainment Group's Queen's Wharf casino bid faces regulatory scrutiny, 16 September 2022 [5] The Australian, Star Entertainment Group's Queen's Wharf casino bid faces regulatory scrutiny, 16 September 2022
The binding sale of Star's 50% stake in Queen's Wharf to its partners will significantly alleviate the company's financial burden, with over $700 million in liabilities being removed and more than $350 million in development costs being shifted. In contrast, the withdrawal from the project raises labor and operational concerns, as ongoing industrial actions by staff could potentially impact major equity partners.
