Star Entertainment gets last-minute extension on threatened casino deal exit

Australia's Star Entertainment SGR said it had secured a last-minute reprieve from Hong Kong investors who had threatened to abandon their Queen's Wharf casino deal, with both sides agreeing to extend talks beyond a looming five-day deadline.

Chow Tai Fook Enterprises and Far East Consortium 35, holding 25% each in the project, had issued a termination notice last Monday, threatening to walk away from their agreement to buy Star's remaining 50% stake unless conditions were met within five business days.

The Hong Kong firms agreed Monday morning to "a set of principles under which there will be certain departures from the heads of agreement", Star said, extending the termination deadline to July 31 to allow parties to finalise long-form documents.

Shares in Star fell as much as 3.85% to A$0.125, as of 0024 GMT, while the broader benchmark XJO traded largely flat.

Far East Consortium in a separate statement said discussions over the past week focused on "matters principally relating to the orderly transition of the management of the Queen's Wharf project, to ensure certainty for the JV partners and other relevant stakeholders in facilitating the exit of The Star from the equity and management of the project."

However, Star will face financial penalties if the deal collapses. The casino operator must repay A$10 million ($6.55 million) it received from the Hong Kong partners within 30 days, and reimburse them for their share of equity contributions made to Brisbane's new Queen's Wharf casino and hotel complex since March 31.

Star's shareholders, late in June, backed a A$300 million bailout package designed to keep the struggling casino operator afloat. The rescue effort is spearheaded by the U.S. gaming company Bally's Corp BALY in partnership with the Mathieson family, Star's biggest existing investor.

($1 = 1.5272 Australian dollars)