Star Entertainment Group is nearing a pivotal moment as it attempts to stave off financial collapse through the potential sale of its Brisbane casino and entertainment complex. Reports indicated on Thursday, March 6, 2025, outlined how the struggling casino operator is reportedly close to securing a \$50 million loan from Chow Tai Fook Enterprises and Far East Consortium, two Hong Kong-based firms.
The company has faced overwhelming liquidity issues, prompting the suspension of its shares on the Australian Securities Exchange (ASX) when it failed to lodge its half-year results by the February 28 deadline. Star's financial predicament has been dire, with shares plummeting more than 75% over the last year, and the company currently valued at just \$307 million.
Star's situation escalated to the point where executives warned they might not remain operational without immediate financial backing. The Australian Financial Review reported these Chinese investors were willing to inject much-needed capital, possibly drawing Star back from the brink of administration.
According to sources familiar with the discussions, the deal involving the two companies could lead to their control over Star’s operations at the Brisbane casino. A successful agreement could prevent the need for immediate administrative action, allowing the company to keep its doors open during one of its most turbulent financial periods.
On March 6, hours after resuming trade, which saw shares slide 17% to 11 cents, Star issued statements hinting at its prospects of receiving one or more liquidity proposals. The company highlighted its situation had become increasingly precarious, stating prices could only be finalized if they received sufficient funding reliable enough to be considered for keeping the business viable.
Chow Tai Fook and Far East Consortium already made significant investments at Brisbane’s Queen’s Wharf development, each holding 25% stakes there. The potential sale of Star’s stake is seen as necessary for cash flow, and there is hope it can generate around \$50 million to keep the company afloat, at least temporarily.
Star's Chief Executive Steve McCann is also exploring the sale of the company's events center at its Sydney premises, which may yield \$60 million. Earlier this year, the events center was valued at \$100 million, and after negotiations with Foundation Theatres it was set to sell. Despite all efforts, including contemplating substantial deals like the \$650 million lifeline from American asset management firm Oaktree Capital, Star has been unable to finalize any new financing to alleviate its debt burden.
Star's financial struggles include obligations of approximately \$430 million to various lenders, and the interest rates have reportedly reached around 16%. Contributors to potential financial solutions also include coal magnate Chris Wallin, who has offered Star \$200 million to aid their efforts to complete the sale and maintain operations.
Nonetheless, Star has expressed, “It is unlikely” they can lodge their financial results without securing new funds. They hinted to shareholders about potential liquidity offers but expressed skepticism about their viability without major restructuring and capital adjustment.
Compounding the urgency is the approach of the weekend; reports suggested the company could plunge directly to administration by March 8 or 9 if the deal is not concluded quickly. Star has previously rejected multiple offers due to disagreements on core terms with investing parties. Moving forward, the current necessity is bolstering their liquidity position to preemptively counteract insolvency.
The ASX suspended Star from trading not only due to its failure to submit financial declarations but also because of the heightened risk surrounding its operations. With their future uncertain, reports by multiple outlets confirm this is one of the most challenging moments for Star Entertainment Group.
While attempts to refashion strategies and include new investors are underway, their survival depends significantly on successfully closing the Brisbane casino deal soon. It will be telling how Star manages to navigate this precarious financial terrain; if they succeed, it could signal resilience for the city’s entertainment scene, otherwise, it could indicate the end of the line for the iconic casino brand.