Star Entertainment Group has announced its decision to sell the Star Sydney Event Centre and associated spaces at The Star Sydney to Foundation Theatres for A$60m.
The deal is seen as part of the casino operator’s efforts to manage its ongoing financial struggles and stave off insolvency.
Star disclosed the sale through an Australian Securities Exchange (ASX) filing, stating that it had executed an exclusivity arrangement and binding term sheet.
The transaction remains subject to the finalisation of long-form transaction documents and various regulatory approvals.
As part of the deal, Foundation Theatres has agreed to deposit a A$60m exclusivity fee into escrow by 31 January. The funds will be released to Star Entertainment as consideration once the transaction is finalised.
Upon completion, the A$60m will be deposited into a disposal proceeds account, as required by the company’s debt facility agreements.
This money will be categorised as restricted cash, meaning it cannot be freely used for operations but will contribute to the company’s financial restructuring efforts.
Foundation Theatres has had a longstanding relationship with Star. The company acquired the sublease for the Sydney Lyric Theatre in 2011 and has been operating within Star’s precinct for over a decade.
Star has stated that the sale aligns with its broader efforts to restructure and streamline its business.
The divestment of non-core assets is intended to refocus the company’s operations while ensuring that entertainment offerings at The Star Sydney continue under new management.
Asset sales as a strategy for financial survival
Star has been actively pursuing asset sales to address its financial difficulties. The company has admitted that its avenues for raising liquidity are increasingly limited.
This latest divestment follows the earlier sale of the leasehold of the Treasury Casino real estate in Brisbane to Griffith University for A$67.5m.
Star already had plans in place previously to transfer the casino licence of the property to its Queen’s Wharf casino in Brisbane.
The company has been struggling to manage its financial obligations, including approximately A$1.6bn in debt tied to the development of the Queen’s Wharf project.
In December last year, Star accessed A$100m from its A$200m debt facility, leaving just A$79m in available cash by the end of the year.
These developments have raised concerns about the company’s ability to continue operating without further financial restructuring.
The casino operator has also indicated that it is considering additional asset sales. It may look to sell hotel properties in Sydney and the Gold Coast as part of its broader strategy to generate cash flow.
Regulatory challenges still hang over Star
Star’s financial woes have been compounded by ongoing regulatory investigations. The NSW Independent Casino Commission has been investigating the company’s operations, uncovering multiple compliance failures following the Bell II inquiry.
The regulator almost revoked Star’s Sydney casino licence last October but continues to monitor the company closely.
Both Star’s NSW and Queensland casino operations remain under government supervision.
The company also faces a potential fine from the Australian Transaction Reports and Analysis Centre (AUSTRAC) over alleged breaches of anti-money laundering and counter-terrorism financing laws.
Star has set aside A$150m in preparation for the fine, though the penalty could exceed A$300m.
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