The Star Entertainment’s Shares Plummet as DBC Sale Fails

The Star Entertainment Group announced that the planned sale of its interest in the Destination Brisbane Consortium (DBC) has fallen through, with its joint venture partners refusing to further extend the heads of agreement deadline.

This major setback has caused the company’s stock to take a major dip.

The Star Sought to Sell Its DBC Stake

In March, The Star signed a binding heads of agreement (HoA) with its joint venture partners, Chow Tai Fook Enterprises Limited and Far East Consortium International Limited, to sell its ownership interest in the Destination Brisbane Consortium (DBC), Destination Gold Coast Consortium (DGCC) and other assets.

On June 30, the company’s joint venture partners sent a notice to terminate the HoA due to conditions that were not met. A week later, however, The Star announced a revised HoA termination date.

Under the new agreement, The Star and its joint venture partners had until July 31, 2025, to finalize and negotiate certain long-form documents.

However, by July 30, The Star said, in its quarterly activities report, that the parties were unlikely to finalize the documents in question.

The Joint Venture Partners Refused to Extend the Deadline Further

In an ASX announcement published on August 1, The Star confirmed that it was unable to reach a consensus with its Joint venture Partners. While the company proposed further extending the HoA termination date, setting August 6, 2025, as the new deadline, its partners rejected the proposal.

As a result, the HoA Termination Notice has taken effect and the HoA has been terminated with effect from August 1.

With the deal having fallen apart, The Star will retain its 50% equity interest in DBC, as well as its 1/3 equity interest in DGCC. In addition to that, The Star will also retain the Treasury Brisbane hotel and car park and its 50% equity interest in the Charlotte Street Car Park (Festival).

Per the HoA deadline extension agreement, the Australian casino operator will also be required to repay the AUD 10 million of proceeds it received from its partners and reimburse them for its share of equity contributions that were made by the Joint Venture Partners to DBC since March 31. The Star added that this sum is expected to stand at approximately AUD 31 million.

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 also continue to be responsible for its share of future equity contributions to DBC, which are estimated to be approximately AUD 300 million. Additional equity might also be required to refinance the DBC debt facility.

The Star’s Shares Plummeted

The Star concluded that it is currently weighing its options for its stake in DBC, along with the Treasury Brisbane hotel and car park, as well as its 50% equity interest in the Charlotte Street Car Park.

In the meantime, the failed deal caused an immediate slump in the company’s share price. As of the time of this writing, the company’s stock is worth AUD 0.092 apiece, marking a new all-time low for the embattled business.