By Duncan Evans
Star notified investors on Monday morning that its joint venture partners in the mammoth Queen鈥檚 Wharf precinct had walked away from an agreement struck in March to take over Star鈥檚 stake in the complex.
Under the deal, Chow Tai Fook Enterprises and Far East Consortium would acquire Star鈥檚 50 per cent stake in Queen鈥檚 Wharf, known as Destination Brisbane Consortium, for $53m.
鈥淪ince the recent general meeting, the parties have continued to negotiate with a view to finalising the long form documents but, as of this morning, have not reached an agreement on the outstanding commercial issues,鈥 the company said in an ASX release.
鈥淭his morning, The Star received from the joint venture partners a notice to terminate the heads of agreement which will become effective five business days from today, unless withdrawn earlier.
鈥淒espite the receipt of this notice, The Star remains willing to continue negotiations with the joint venture partners to give effect to the DBC transaction.鈥
The buy out would have rid Star of a substantial $1.4bn debt obligation as the company struggles to stay afloat amid mounting financial pressures, including declining revenues and looming penalties from casino regulators.
Star would also hand over its Treasury Hotel and carpark in the Brisbane CBD under the deal.
The troubled company鈥檚 asset base traverses three cities: Brisbane, the Gold Coast and Sydney.
Star had planned to exit Brisbane and focus its operations on the Gold Coast and Sydney, but that plan is now on shaky ground.
Separately, US casino giant Bally鈥檚 lobbed a $300m takeover bid for majority control of Star in April.
Bally鈥檚 chief executive Soo Kim said his company was prepared to 鈥渋nvest significant time and resources鈥 to return Star to 鈥減rofitability and sustainability鈥.
鈥淥ur team has successfully improved more than 20 individual property acquisitions over 15 years in a variety of challenging circumstances across the entire spectrum of gaming regulatory environments and market conditions,鈥 Mr Kim said.
Bally鈥檚 operates 19 resorts and casinos across the US, including casinos in gaming meccas Las Vegas and Atlantic City.
Star鈥檚 board backs the Bally鈥檚 proposal, but it must also receive shareholder and regulatory approval.
Monday鈥檚 update delivers another twist in Star鈥檚 slow but steady breakdown.
In July last year, the company boasted a market capitalisation of $1.5bn.
Now it is valued at $436m, with its shares trading at 15c.
Shares in the company lifted 1.4 per cent on Monday鈥檚 news.
The gaming giant is nearly out of cash and confronting a severe downturn in revenues as an exodus of high rollers and cost-of-living pressures hit the business.
It is also battling a tangled swirl of corporate watchdog investigations and penalties for serious failures at its operations.
In October 2022, the NSW Independent Casino Commission imposed a $100m fine on Star after finding the company had allowed money laundering to take place at its Sydney casino.
A further penalty from federal government agency Austrac is looming.