Star Entertainment Group Ltd (ASX: SGR) shares fell 9.1% to 10 cents per share after a disappointing update on Friday.
Star Entertainment has announced that the deal to sell its 50% stake in Queen's Wharf, plus other assets in Brisbane, is now off.
This is a significant development given that the cash-strapped casino sought to sell the assets to boost its balance sheet.
Revenues are down, with Star Entertainment reporting an unaudited $270 million in revenue for 4Q FY25, down 31% on 4Q FY24.
Star came close to folding earlier this year until a takeover deal, along with the sale of its Brisbane assets, saved it.
Here's what is happening now.
Image source: Getty Images
Star Entertainment shares tumble on deal termination
Star had previously inked a deal to sell its Brisbane assets to its Hong Kong joint venture (JV) partners.
Its JV partners are Chow Tai Fook Enterprises Limited and Far East Consortium International Limited.
However, Star and its JV partners were "unable to reach agreement on a number of outstanding commercial issues" relating to the deal.
This means Star Entertainment will have to pay back the $10 million it received from the JV partners by next Wednesday.
Star must also reimburse the JV partners an estimated $31 million in equity contributions by 5 September.
The JV partners are estimated to owe Star $1 million in equity contributions.
If Star Entertainment cannot make these payments, it must give the JV partners its one-third stake in the Dorsett Hotel on the Gold Coast.
Star Entertainment gets to keep the $35 million prepayment for the sale of apartments in the Tower 2 development on the Gold Coast.
The collapse of the deal means Star Entertainment will retain its 50% equity interest in Destination Brisbane Consortium (DBC).
It will also retain its one-third equity interest in Destination Gold Coast Consortium (DGCC).
This means continued part-ownership of the Queen's Wharf precinct and the Charlotte Street Car Park.
It also means continued full ownership of the Brisbane Treasury Hotel and two car parks.
The parent company's guarantee of Star Entertainment's 50% share of the DBC debt facility remains in place.
DBC's total current drawn balance on the debt facility is approximately $1.4 billion.
Star Entertainment will remain responsible for its share of future equity contributions to DBC, estimated at $200 million.
The casino operator warned that additional equity may be required as part of the refinancing of the DBC debt facility.
The debt facility expires in December.
Anyone else want to buy Star's Brisbane assets?
Star Entertainment said it would remain engaged with its JV partners and would update investors if anything changed.
Management said:
The Star is continuing to engage with the Joint Venture Partners and will provide an update if there are any material developments regarding the parties' respective interests in DBC and DGCC.
Meanwhile, Star Entertainment said it would consider "alternative options" as to what to do with its Brisbane assets.
Star Entertainment shares snapshot
Stock in Star Entertainment has crumbled 82% over the past 12 months.
