Star Entertainment Group’s bid to sell its half-stake in the money-losing Queens Wharf Brisbane entertainment complex for $53 million is faltering.
In a statement to the ASX on Wednesday, the embattled casino operator said that based on the current status of discussions, it was “unlikely” the parties would be in a position to finalise sale documents by Thursday’s deadline.
That deadline was already extended early this month as Star negotiated with its Hong Kong partners, Chow Tai Fook and Far East Consortium.
Each hold a quarter-stake in the $3.6 billion mixed-use megaproject that opened late last year.
Unless the parties agree to another extension, Star would have until next Wednesday to pay back a $10 million advance on the sale it received in March, and until September 5 to send them another $26.5 million.
Star’s financial position improved considerably in the last quarter, however, after it received a total of $233 million from US gaming giant Bally’s and billionaire pub baron Bruce Mathieson as part of a $300 million rescue deal.
Star had $234 million in available cash as of June 30, compared to just $44 million on March 31, and is set to receive another $67 million from Bally’s and Mathieson by October 7.
But the company kept burning through cash during the fourth quarter, losing $27 million in earnings before interest, tax, depreciation and amortisation, up from a $24 million loss it incurred in the third quarter.
Star blamed the loss on an “ongoing challenging operating environment” including the impact of mandatory carded play and cash limits in NSW and stricter regulatory requirements across all its properties.
Star says the $5,000 cash limit and mandatory carded play that NSW regulators imposed on the Star Sydney casino last October have led to a 17 per cent drop in revenue there, and the cash limit is set to reduce further on August 19, to $1,000.
“The Group’s ability to continue as a going concern remains dependent on several key matters,” Star said, pointing to a list from April of 13 different issues it needs to resolve if it is to remain able to pay its debts on time.
A major issue is the $400 million fine the Australian Transaction Reports and Analysis Centre is seeking to impose on Star for years of allowing VIP clients to launder dirty money at its casinos.
Star says $100 million is all it can afford and a $400 million penalty would send it into insolvency.
At midday Star shares were flat at 11.5 cents.
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