Rock on: Brisbane Develop gets involved, page-82

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A consortium that put forward an informal proposal to Star Entertainment has claimed it has a long-standing commercial relationship with Hard Rock International and kept the Florida-based group in the loop on discussions.

Two firms – HDI-BB and Hotel Development International – confirmed on Monday that they approached Star in March with a strategy to turn around its assets in NSW and Queensland.

The two companies said they had submitted an indicative non-binding proposal to acquire the Sydney assets, and had held the rights to use the Hard Rock brand across designated territories, including Australia, for more than 30 years. Both firms count Brisbane developer Patrick Farrugia, who also controls Hard Rock Hotels and Resorts (Pacific), as a director. Other directors include Steve Munro, Peter Rodgers and Mark Daley.

Mr Farrugia has previously told The Australian Financial Review that one of his companies decades ago successfully operated and sold some Australian Hard Rock Cafe sites, including one in Surfers Paradise.

“The turnaround strategy included repositioning and rebranding assets with many well-known international brands, none of which were pre-committed at that time,” the statement read. “HDI was confident, based on its existing relationships, that they would have an interest in engaging once the due diligence and regulatory issues of Star Sydney had been settled.”

The companies exclusively conducted the discussions with Star, but claimed they kept the international entertainment giant apprised of its proposal. The statement said the proposal did not involve an equity investment from Hard Rock International.

“HDI denies that it gave any contrary assurance to Star with respect to these matters,” it said. “HDI is extremely disappointed with the breach of confidentiality in relation to its proposal.”

No answers from Hard Rock

The statement comes a week after Star confirmed a report in the Financial Review that it had been approached by a consortium of investors including Hard Rock Hotels & Resorts (Pacific), “a local partner of Hard Rock”.

But hours later, Hard Rock, which is owned by the Seminole Tribe of Florida, said it had not licensed its name for such a proposal. “Any misuse of the Hard Rock name in unauthorised business dealings is taken very seriously,” the American entertainment company said in a statement. “We are currently investigating this matter and will pursue all necessary legal actions to protect our brand and reputation.”

Shares in Star rose 20 per cent after the company confirmed the approach but dropped in the ensuing confusion. Hard Rock has not responded to repeated requests for clarification since the initial announcement.

Star is in the midst of a damaging inquiry in NSW, which is considering whether to take back its casino licence in Sydney. The company’s chief executive and chairman are among senior figures to have left since January.

Other casino owners and distressed debt funds have considered making proposals for Star. The company could be stripped of its licences to operate gaming floors in NSW and Queensland, and faces a fine from AUSTRAC, which has accused Star of “serious and systemic non-compliance” with anti-money laundering laws.

Blackstone, which owns Star’s major local rival, Crown Resorts, is still interested in the asset, but sources with knowledge of the situation said no proposal had been put forward.

Star shares are trading at 48¢, up 0.4 per cent, in mid-morning trading.