Star Entertainment Group—backed by Australian gambling billionaire Bruce Mathieson—is in talks to sell its resort complex in Brisbane to their Hong Kong partners as the cash-strapped casino operator seeks to raise fresh capital to shore up its finances.
The Star complex, operated by Star Entertainment Group Ltd., in Sydney, Australia.
© 2024 Bloomberg Finance LP
The Brisbane-based company, which had warned last month that it will run out of cash if it failed to raise fresh funding, said it had received non-binding offers from Hong Kong-based partners including Chow Tai Fook Enterprises (controlled by real estate billionaire Henry Cheng and his family) and Far East Consortium to buy 50% of the Brisbane property.
However, Star’s board had carefully reviewed all proposals, with external advice, and determined that none offered sufficient value. The company said that it will continue its discussions with Chow Fai Fook and Far East Consortium to explore a potential sale of its stake in the Brisbane property on acceptable terms but notes that no transaction is guaranteed.
The embattled casino operator struggled to raise fresh capital amid slumping gaming revenues. The company is exploring various options to increase its liquidity, but it has limited capacity to raise A$150 million in subordinated debt. This funding is a crucial requirement for unlocking an additional A$100 million loan.
The troubles of Star started in 2021 after the Sydney Morning Herald reported that the company allowed money laundering and organized crimes in its casinos for years. The following year, regulators ruled that the company was unsuitable to operate its casinos in Sydney and Queensland, placing them under government supervision. Since then, almost A$4 billion in Star’s market capitalization has been wiped out.
Mathieson is Star’s largest shareholder with a stake of about 10%, according to the company’s latest annual report. He has an estimated net worth of $1.1 billion according to Forbes’ real-time data. Mathieson runs his poker machine and pub empire, Australian Liquor and Hospitality, in a joint venture with supermarket giant Woolworths. He also holds a minority interest in the publicly listed Endeavour Group, which owns both the Australian Liquor assets and Woolworths’ liquor retailing business.
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