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Star sold its stake in Queen’s Wharf Brisbane to its Hong Kong business partners
Star Entertainment acknowledged Tuesday that it had received a refinancing proposal from fund manager Salter Brothers Capital with the potential to provide debt capacity of up to A$940 million ($590 million) for the cash-strapped Australian casino group.
The deal would give Star enough liquidity to refinance all its existing debt, the Brisbane-based company said in a stock filing. The announcement confirmed the identity of Salter Brothers as the “potential lender” mentioned in a statement issued last Friday about the proposal. Australia’s Financial Review first reported Salter Brothers’ involvement on Monday.
Star has granted a period of exclusivity until 18 March for Salter Brothers to conduct due diligence, with the agreement following closely on last week’s quick disposal of Star’s half-stake in the Queen’s Wharf Brisbane complex to Hong Kong investors Chow Tai Fook Enterprises and Far East Consortium.
“The parties have agreed to work towards a binding offer of finance with respect to the refinancing proposal which, if accepted by The Star, would be followed by a further period of exclusivity to enable preparation of long form facility documentation and finalisation of conditions precedent,” Star said in its Friday statement.
Rescuers Queue Up
Melbourne-based Salter Brothers, which has been gearing up for an Asia Pacific hotel IPO, is one of a growing list of firms seeking to extend a lifeline to Star after the ASX-listed group said its available cash fell 47 percent to A$79 million in the three months to 31 December.
Salter Brothers managing director Paul Salter (Image: Salter Brothers)
On Monday, Star disclosed an offer from US-based Bally’s Corporation to provide A$250 million in capital from the issuance of notes convertible into 50.1 percent of the group’s ordinary shares. In a letter to Star’s board, chairman Soo Kim touted Bally’s experience as an owner-operator of 19 US casinos and track record as a turnaround specialist.
Last month, distressed debt specialist Oaktree Capital Management proposed to lend $650 million to Star via two facilities with a term of five years, subject to conditions including a comprehensive security package and completion of due diligence. Star said Friday that those conditions had yet to be met.
Star also noted last week that it had signed a commitment letter with respect to a $250 million senior secured bridge facility with funds managed by King Street Capital Management — a stopgap measure as the group seeks to secure sufficient liquidity for a longer-term refinancing of existing senior debt.
Queen’s Wharf Concerns
Chow Tai Fook Enterprises, the private holding company of New World Development chairman Henry Cheng, and the Chiu family’s Far East Consortium agreed last week to acquire the 50 percent interest they didn’t already own in Queen’s Wharf Brisbane from Star.
The Hong Kong investors are paying A$53 million in cash to the Australia group, including an initial tranche of A$35 million transferred Friday, while handing back their 66.67 percent interest in two Gold Coast hotel projects.
The former Labor government in Queensland, which lost power last year, had raised concerns about Chow Tai Fook’s alleged relationship with former junket boss and convicted fraudster Alvin Chau, as reported by the Financial Review. A representative for the state’s attorney general told the newspaper that the new government had received no formal notice from Star about the plan to sell its stake in Queen’s Wharf Brisbane.
Sources close to Star contend that the group had no obligation to formally notify the government of the transaction because Star continues to operate the casino, the Financial Review said.
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