No certainty: The Star clarifies on DBS stake sale amid skating on thin ice

February 10, 2025

No certainty: The Star clarifies on DBS stake sale amid skating on thin ice

Australia’s The Star Entertainment Group’s Hong Kong-listed partners, Chow Tai Fook Enterprises Limited (CTFE) and Far East Consortium International Limited (FEC), have shown interest in acquiring the controlling 50 percent stake in the Destination Brisbane Joint Venture (DBC) which owns The Star Brisbane integrated resort.

The Star confirmed the proposals, which have now been knocked back. The company that it has received the proposals and concluded “that none of the proposals have provided sufficient value for The Star.”

Over the weekend, there was media speculation that the Hong Kong entities, who each hold a 25 percent stake in the Destination Brisbane Joint Venture that owns The Star Brisbane, had tabled an offer to Star. The offer was to help alleviate The Star’s perilous financial position.

The Star Brisbane integrated resort

The opening of The Star Brisbane integrated resort, which began with a soft launch in August, has not been the economic boon the company had anticipated. Its opening has burdened the company with AU$1.6 billion in additional debt, which has placed significant strain on its operations and still requires significant investment before completion.

According to The Star, it has received “several confidential, indicative and non-binding proposals from CTFE and FEC seeking to acquire The Star’s 50 percent interest in Destination Brisbane Consortium, along with other assets.”

CTFE and FEC have put forth several non-binding, indicative proposals to acquire The Star’s 50 percent interest in the Destination Brisbane Consortium. These proposals also include the acquisition of other assets, signaling their broader interest in The Star’s portfolio.

However, “The Board of The Star has assessed each of the CTFE and FEC proposals received to date, and after careful consideration (which has included external advice) concluded that none of the proposals have provided sufficient value for The Star.”

Negotiations open

The Star maintains that it continues to engage with its partners to determine whether a sale of its 50 percent interest can be negotiated on terms satisfactory to the company. However, there is no certainty that it would result in a transaction.

“The Group continues to explore possible liquidity solutions,” it said.

The said transaction could be a game changer for the embattled operator, which has issued stark warnings about its financial future, citing limited avenues to secure additional liquidity.

The operator has sold some of its non-core assets, including the old Treasury Casino and recently The Star Sydney Event Centre and associated spaces to Foundation Theatres in a deal worth AU$60 million (€35.85 million). The selloffs are part of The Star’s efforts to stave off insolvency, with the sale expected to provide much-needed liquidity.

The Star’s woes

The company’s financial woes come against the backdrop of prolonged regulatory scrutiny, which has exacerbated The Star’s operational challenges. Regulatory measures, including mandatory carded play and cash limits in New South Wales, have further dampened revenues.

For the December 2024 quarter, The Star Entertainment Group reported a narrowed EBITDA loss of AU$8 million (€4.78 million), improving from an AU$18 million (€10.75 million) loss in the prior quarter. Quarterly revenue declined by 15 percent sequentially to AU$299 million (€178.88 million), highlighting ongoing operational challenges.

Despite these figures, the company noted a positive turn in November and December 2024, achieving EBITDA breakeven during those months due to its cost-cutting measures and seasonally stronger December revenue.