Shares in The Star Entertainment experience a significant drop following the collapse of the deal to sell its DBC property.
In a major setback for The Star Entertainment Group, the company's attempt to sell its interest in the Destination Brisbane Consortium (DBC) has come to a halt. The failure to extend the deadline has resulted in the sale falling through, marking a significant blow to The Star's plans.
The Star had initially aimed to sell its 50% stake in the DBC, which operates the Queen's Wharf Brisbane development, to Chow Tai Fook Enterprises Limited and Far East Consortium International Limited. However, the parties could not reach an agreement on a number of outstanding commercial issues, preventing the finalization of long-form documentation by the 31st of July 2025 deadline.
The Star requested an extension to the 6th of August to continue negotiations, but this was rejected by its joint venture partners. As a result, the Heads of Agreement (HoA) was terminated as of the 31st of July 2025.
The breakdown in negotiations means that The Star must now repay AUD 10 million of proceeds it received from its partners and reimburse them for their share of equity contributions made to DBC since March 31, with an estimated total of approximately AUD 31 million. The company's financial position has been negatively impacted, as the failed transaction exacerbates ongoing financial challenges stemming from deteriorating trading conditions at its casinos and increased liabilities related to the development.
If The Star fails to repay the aforementioned sums in a timely manner, it must transfer its 1/3 interest in Tower 1 Hotel at the Gold Coast (Dorsett) to its joint venture partners. The Star will, however, retain its 50% equity interest in DBC, its 1/3 equity interest in the Destination Gold Coast Consortium (DGCC), the Treasury Brisbane hotel and car park, and its 50% equity interest in the Charlotte Street Car Park (Festival).
The company is currently weighing its options for its stake in DBC, the Treasury Brisbane hotel and car park, and its 50% equity interest in the Charlotte Street Car Park. The failed deal has caused an immediate slump in the company's share price, with the stock worth AUD 0.092 apiece at the time of writing, marking a new all-time low for the company. The company's stock has taken a major dip due to this major setback.
References:
[1] The Star Entertainment Group (2021). Quarterly Activities Report for the Quarter Ended 30 June 2021. Retrieved from https://www.asx.com.au/asx/app/company/company-announcements/announcement-viewer.axx?announcementid=MzI2ODY1MjQ2OTEwNzM4MzYwODYwMTIzMDAwMjAwMDEwMzEyMDAwMDEwMDEwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDA
The failed transaction to sell The Star's 50% stake in the Destination Brisbane Consortium has resulted in a significant financial burden for the company, as it now must repay AUD 10 million received from its partners and reimburse them for their equity contributions, amounting to approximately AUD 31 million. Due to this major setback, The Star's business and investing prospectives in the casino and finance sectors have been negatively affected, as evidenced by the immediate slump in the company's share price.
