Queensland government may provide lifeline as Star struggles

The Queensland government has signalled it may move to support thousands of jobs under threat at Star Entertainment’s new $3.6bn Queen’s Wharf project, amid rising speculation the troubled casino operator could face an emergency break-up.

Deputy Premier and Treasurer Cameron Dick said on Tuesday the state government was considering a raft of options to support Star, which is scrambling to raise $300m in short-term funding to keep its doors open.

“We are only at the preliminary discussion stage with Star and let’s see how that goes,” Mr Dick said. “We are looking at a whole range of things with Star to support their operations and importantly to protect 1400 new jobs at Queen’s Wharf. They may not need the support.”

The Star employs a total of 3000 people at Queen’s Wharf in Brisbane, including those who were transferred from its existing casino in the heritage-listed Treasury building.

The potential lifeline from Queensland, where an election is due on October 26, comes as NSW earlier this week rejected any financial help for Star. The company has been suspended from trading on the ASX for failing to lodge its annual financial results and now faces losing its Sydney casino licence.

The NSW government said it was the responsibility of The Star to maintain the financial viability of its business and “any NSW taxpayer assistance would primarily support The Star’s Queensland expansions”.

Star is facing a cash crunch after Queen’s Wharf opened last Thursday, two years behind schedule and with a massive cost blowout. The project, which takes up 10 per cent of Brisbane’s CBD, faced cost overruns of at least $260m and a threatened lawsuit from builder Multiplex that was narrowly averted last year.

The day after the opening of Queen’s Wharf, the NSW Independent Casino Commission (NICC) released the findings of the Bell II inquiry: that the company was still unsuitable to retain its Sydney casino licence.

Star, which has seen its share price halve in the past 12 months, went into a voluntary trading halt on Friday morning after the NICC released the first two volumes of Adam Bell SC’s second inquiry into Star’s continuing regulatory failures.

NICC chief commissioner Philip Crawford on Friday said the Bell II report revealed a company that had not moved quickly enough to address the governance and cultural concerns raised in the first Bell report.

The NICC said the third volume of Mr Bell’s report, which includes an evaluation of Star’s finances, was confidential and subject to a non-publication order.

That included testimony from restructuring partner Sebastian Hams, who was called in the final days of the Bell II inquiry to discuss the finances of the group.

Mr Hams has 20 years’ experience in large-scale restructurings, including those of Ansett and Virgin Australia.

Star will need to refinance more than $1bn worth of debt over the next 14 months for Queen’s Wharf.

People close to the company this week warned “sharks were circling” amid growing fears it may not be able to survive as a going concern.

Hunter Green IB director Charlie Green said it was now all hands to the pump at Star, to figure out the best way ahead for stakeholders. “Otherwise, Star becomes a black hole pretty quickly,” said Mr Green.

“All stakeholders will have to put aside their differences, and compromise, to get the best outcome for everyone.”

Everyone would “need to take a haircut”, including the property joint venture partners in Queen’s Wharf. “It is a tough gig for the new regime to sort it all out,” he said.

Star’s new chief executive, Steve McCann, a former boss of rival Crown Resorts, is in urgent talks with bankers and investors as he seeks to raise hundreds of millions of dollars in short-term lending. That cash lifeline will be vital if Star is to avoid breaching its debt covenants, with the next three to six months crucial for the future of the company.

People close to Star believe the company may need a multibillion-dollar investment to ensure its future, similar to that made by US-based Blackstone when it acquired Crown Resorts in 2022. The Blackstone takeover resulted in Crown Sydney having a sound and stable financial background and the necessary resources to safeguard the viability of the casino, as well as a revamped corporate structure.

The Australian revealed in July that Star Entertainment had as many as four bidders circling its struggling operations this year, with the most serious a cashed-up Los Angeles-based casino developer who lobbed plans to dramatically upgrade Star’s local offering. Brent Stevens, the founder and chairman of US casino investor Peninsula Pacific, was in Australia for more than a week in June looking at Star’s Sydney and Queensland properties.

Westpac and Barclays were among those underwriting a $450m refinancing of The Star’s debt facilities last year.

In a trading update in June, Star warned higher costs associated with remediation as well as difficult economic conditions would continue to bite. Revenue in the fourth quarter is expected to be down 4.3 per cent from the previous quarter and 3.3 per cent lower than the prior corresponding period. Annual group revenue would be between $1.67bn and $1.68bn, while earnings are to be in the range of $165m to $180m, Star forecast in June.

More Coverage