Analysis of Treasury Brisbane deal – will it relieve Star Entertainment’s struggles?

Star Entertainment Group's decision to sell the Treasury Brisbane Casino building is emblematic of the company's troubled past. While the sale will provide a short-term cash injection, it is far from resolving the company's significant financial and operational challenges. Potential capital raises have been fraught with difficulties, and without a clear regulatory outcome, the company's future remains uncertain. Star may need to consider more drastic measures, including asset divestitures, to weather this troubled corporate journey. Whether it can navigate this successfully remains to be seen, but the road ahead is far from smooth.

Star Entertainment Group, once a key player in Australia's casino and hospitality sector, is currently in a period of extreme turmoil. It is burdened with more than $1 billion in debt, and its reputation has been tarnished by regulatory scandals. The recent sale of the Treasury Brisbane Casino Building to Griffith University for $67. 5 million is seen as a stop-gap measure to ease the financial burden, but a bigger question looms: Will it be enough to stabilize the cash-strapped company, and will The Star be able to raise capital in its current precarious state?

Corporate governance and regulatory expert Dr Colin Lawrence told SiGMA News, "Star needs to overhaul its strategy. Having lost 87. 5% of its enterprise value in four years, a sale is a likely option. The company needs to comprehensively review its risk-adjusted profitability and may have to form partnerships that could violate antitrust laws."

The Star’s downward spiral

Star Entertainment Group is facing financial problems exacerbated by regulatory compliance lapses and market challenges. The company's financial health has become clearer after it was revealed it needs to refinance $1 billion in debt. The sale of assets like the Treasury Brisbane Building is one of the measures being taken to shore up liquidity. But this is only a Band-Aid to a bigger, deeper wound.

The Queensland government is considering tax incentives for The Star, but that may not be enough to keep it afloat in its current form. Regulatory scrutiny has intensified following the publication of a second Bell investigation that questioned the suitability of The Star holding a casino licence. Any potential capital raise in this environment is risky.

Asset sales are a necessity not a solution

The sale of the Treasury Brisbane Casino building to Griffith University is a necessary but insufficient move for The Star. With net proceeds of $60. 7 million, the company can reduce its outstanding debt a little, but it does little to address its long-term solvency challenges. Moreover, the company still has other assets in the Treasury complex and Brisbane's Festival Car Park on its books, indicating that the asset sale process is far from complete.

While the sale may provide a temporary breather, the Star remains heavily leveraged. Its 50% stake in the $3. 6 billion Queen's Wharf development is both a potential lifeline and a liability subject to regulatory approval. If these do not materialize, The Star's financial exposure to this megaproject could deepen the crisis rather than resolve it.

Challenges of raising capital

Rumours that The Star may raise capital to shore up its finances raise a significant question. Raising capital in this environment will be an uphill battle, given its tattered reputation and ongoing regulatory challenges. Investors will be wary of putting money into a company with an uncertain future due to regulatory uncertainty and declining market confidence.

Moreover, the market environment is not favorable for The Star. The global economic environment is tough, with rising interest rates and inflation weighing on consumer spending, especially in the hospitality and entertainment sectors. This further strains The Star's earning capacity and makes it less attractive to potential investors.

Even if The Star is able to secure capital, current shareholders' stakes could be written down through high-interest loans and dilution. The sale of the Treasury Brisbane building signals financial responsibility but also signals desperation.

Poaching tactics from Crown Resorts

According to the Australian Daily Telegraph, the latest movements of Star Entertainment of former Crown Resorts executive, Mark McKay, highlights desperate efforts to regain stability. Star has been struggling with huge financial and regulatory pressure, and McKay's appointment is a new attempt to utilize his expertise in rivals, assuming the approval of regulatory authorities. 。 McKay, who was the coo (highest executive officer) at Crown Melbourne, has been a similar position in the era when the Gold Coast hotel was Jupitters Hotel and Casino, and is familiar with star management. I am. Jessica Meller, who resigned in May, was a part of a wider range of strategies, which dispersed management at three star resorts: Brisben, Gold Coast, and Sydney.

It is part of the pattern to appoint a former crown executive, including Steve McCan's new CEO and Genie Moku COO. Star is actively active from competitors to stabilize management and to fill the gaps of leadership led by important people, such as CEOs in front of Lobby Cook and Christina Kativoba (CFO). Has adopted. Such a human resources has suggested more than a willingness to rebuild, clarifying the depth of the star's management crisis.

However, the fiscal difficulties of the stars are complicating the renewal of this management team. The stock price has been suspended, and the company has been working on the final adjustment of the $ 300 million refinancing package. One of the few good news is that the Treasure Brisbane leasehold rights were sold to Griffith University for $ 67. 5 million. This sale amount is $ 60. 7 million (about 607 million yen) after the adjustment, which will be some remedies, but it is far from offset the pressure coming from the delay of the Brisbane Queen's Wharf Project. 。

However, the real task is outside the balance sheet. The regulatory authorities have dropped a major shadow on Star's management. The publication of the Bell II Report by the New South Wales Independent Casino Committee (NICC) has already added more uncertainties to the miserable situation. The report indicates that Star does not meet the regulatory standards required for casino operating companies and further impair the trust of investors. Star cannot submit an annual financial report within the deadline, further exacerbates the vulnerability of financials, complete the Brisven project, and avoid losing Sydney's casino license. He is asking if he can secure funds.

Sebastian Hams, a reconstruction expert, was invited to discuss Star's financial status, but the situation is still severe. With over $ 1 billion debts in the next 14 months, regulatory authorities have been forced to make a serious decision to promote the reconstruction of the stars or leave the company to the trustee.

It seems that the current trajectory of the star cannot be maintained unless the financial support of regulatory authorities and financial concerns can be secured to survive the perfect storm. However, despite the veteran executives from the crown, we have to question whether the stars can really recover or whether the coordinator of the leadership is only a sort of the deck chair of the sinking ship.

A tough road ahead

In addition, the possibility of dissolution of the company has been spilled. Collection of assets held by Star, such as investment in Queen's Wharf Project and casino portfolio, may be more partially worthwhile as a whole. Investors may think that buying certain assets can make a greater profit than buying and supporting the entire company.

However, the dissolution has some difficulties. Selling assets in an environment of management difficulty often decreases, which may be insufficient in the capital of The Star's debt repayment. In addition, the regulatory environment may prolong the recovery process by complicating and delaying the possibility of selling the remaining casino business.

Bell inquiry impact

The second bell survey has a long shadow on The Star's management. The New South Wales Independent Casino Committee is in deliberations on the fact that the group has the suitability of the casino license, and the future of The Star's core business is weighing. If you get negative results, you may lead to more severe penalties and licenses, and your financial difficulties will become even more serious.

The uncertainty of such regulations adds another complicated layer to the efforts of capital procurement. Investors tend to shy away from companies facing realistic regulation risks, and the Star situation is no exception.

So far, I have been very negative. Considering all issues, my guess will be merged or further sale. Dr. Colin Lawrence < SPAN>, a corporate governance expert, was invited to discuss Star's financial status, but the situation is still severe. With over $ 1 billion debts in the next 14 months, regulatory authorities have been forced to make a serious decision to promote the reconstruction of the stars or leave the company to the trustee.

Historical legacy of Brisbane’s Treasury

It seems that the current trajectory of the star cannot be maintained unless the financial support of regulatory authorities and financial concerns can be secured to survive the perfect storm. However, despite the veteran executives from the crown, we have to question whether the stars can really recover or whether the coordinator of the leadership is only a sort of the deck chair of the sinking ship.

In addition, the possibility of dissolution of the company has been spilled. Collection of assets held by Star, such as investment in Queen's Wharf Project and casino portfolio, may be more partially worthwhile as a whole. Investors may think that buying certain assets can make a greater profit than buying and supporting the entire company.

Star Entertainment and Queensland government accused of lacking transparency over casino giant’s remediation plan

However, the dissolution has some difficulties. Selling assets in an environment of management difficulty often decreases, which may be insufficient in the capital of The Star's debt repayment. In addition, the regulatory environment may prolong the recovery process by complicating and delaying the possibility of selling the remaining casino business.

The second bell survey has a long shadow on The Star's management. The New South Wales' Independent Casino Committee is in deliberations on the group's appropriateness of casino licensing, and the future of The Star's core business is weighing. If you get negative results, you may lead to more severe penalties and licenses, and your financial difficulties will become even more serious.

The uncertainty of such regulations adds another complicated layer to the efforts of capital procurement. Investors tend to shy away from companies facing realistic regulation risks, and the Star situation is no exception.

Star has been found unsuitable to run casinos in Queensland — what will become of Queen's Wharf?

So far, I have been very negative. Considering all issues, my guess will be merged or further sale. Sebastian Hams, a Corporate Governance expert, Dr. Colin Lawrence, was invited to discuss Star's financial situation, but the situation is still severe. With over $ 1 billion debts in the next 14 months, regulatory authorities have been forced to make a serious decision to promote the reconstruction of the stars or leave the company to the trustee.

It seems that the current trajectory of the star cannot be maintained unless the financial support of regulatory authorities and financial concerns can be secured to survive the perfect storm. However, despite the veteran executives from the crown, we have to question whether the stars can really recover or whether the coordinator of the leadership is only a sort of the deck chair of the sinking ship.

In addition, the possibility of dissolution of the company has been spilled. The collection of assets held by Star, such as investment in the Queens Wharf Project and the Casino portfolio, may be more partially worthwhile as a whole. Investors may think that buying certain assets can make a greater profit than buying and supporting the entire company.

However, the dissolution has some difficulties. Selling assets in an environment of management difficulty often decreases, which may be insufficient in the capital of The Star's debt repayment. In addition, the regulatory environment may prolong the recovery process by complicating and delaying the possibility of selling the remaining casino business.

The second bell survey has a long shadow on The Star's management. The New South Wales' Independent Casino Committee is in deliberations on the group's appropriateness of casino licensing, and the future of The Star's core business is weighing. If you get negative results, you may lead to more severe penalties and licenses, and your financial difficulties will become even more serious.

The uncertainty of such regulations adds another complicated layer to the efforts of capital procurement. Investors tend to shy away from companies facing realistic regulation risks, and the Star situation is no exception.

So far, I have been very negative. Considering all issues, my guess will be merged or further sale. Dr. Colin Lawrence, Corporate Governance expert

'Raises profound issues'

Treasure Brisbane Casino Bill is originally a Treasury Building, an important example of a 19t h-century classic architecture in Queensland. From 1886 to 1928, this building, which was built by the contribution of architect J. J. Clark, features a new classic design, such as a Corinthic column and decorative facade, as a center of Queensland's government. It symbolizes the importance. Initially, the main departments of the government, such as the Ministry of Finance and the Prime Minister's Office, were in the center of state power until the early 1990s.

In the mi d-1990s, the Star Entertainment Group (formerly Tabcorp) acquired the building and rebuilt it into Treasure Brisven Casino. Recently, Star has announced that it will sell the building to Griffith University for $ 67. 5 million as part of the financial restructuring. Griffith University plans to rebuild the building into a new campus in Brisbane City and maintain its historical significance, and to create a modern educational base to accept about 7, 000 students by 2035. The university considers this relocation as an important step to enhance global presence.

The Star Entertainment Group and the Queensland government were accused of lack of transparency after the disadvantageous review did not open the complete improvement plan for major casinos.

Star found a "serious flaw" in an independent agency, and was determined to be inappropriate in 2022 to hold a Casino license in Queensland.

Last year, the entertainment group, which caused the problem, postponed a temporary suspension in Queensland until May after the Ivet Dus Corporation approved the improvement plan.

The photo shows the development of Queen's Wharf and the Starcajino wide shot.

STAR ENTERTAINMENT is a 50 % investor in the development of casinos, housing, and entertainment districts in the center of Brisbane, and is currently shadowed by the project.

The plan is implemented for several years, including 100 efforts and 640 milestones in management and management.

"The improvement plan is a Star Entertainment Group's document and is distributed only by them.

"I believe the stars should be transparent.

ABC asked Star about the full plan, but instead was provided on the company's website, including the latest annual report, investments for investors, and the announcement of ASX.

The company's website has only limited details on Queensland's improvement plan, but THE STAR "I want to be known for being transparent, accountable, and reliable." I mentioned.

ALLIANCE FOR GAMBLING REFORM's Supreme Adviser Tim Costello said, given the history of The Star, the people have the right to access the entire plan.

"It has raised a serious problem with transparency, and the Queensland is not sure if Star is actually reforming.

"The license held by the star paper is public. It is necessary to secure transparency to maintain the license and prove that the license should be regained.

The Star 'committed to being a better company'

The Gambling Reform Alliance Tim Costello Supreme Adviser (ABC News: Brendan Mounter)

Costello also accused the Secretary of Justice, who did not disclose the details of the document.

Star Entertainment Group fined $100 million over Queensland casino breaches

So far, I have been very negative. Considering all issues, my guess will be merged or further sale. Sebastian Hams, a Corporate Governance expert, Dr. Colin Lawrence, was invited to discuss Star's financial situation, but the situation is still severe. With over $ 1 billion debts in the next 14 months, regulatory authorities have been forced to make a serious decision to promote the reconstruction of the stars or leave the company to the trustee.

According to the state government, "The star is too big to crush.

"It's strange that the judge's secretary is doing what they are doing to reassure the people, this is a measure to improve, and to regain the trust of the people.

"This is a little joke," he has to conclude. "

Das also stated earlier that the appointment of Nicholas Weeks Special Manager has been extended to the end of this year, and if the star newspaper does not follow the correction plan, he may face up to $ 5 million fines.

Shadow's Lack of Star and the Ceremony of the General Tim Nichols said that the lack of transparency between Star and Secretary of Justice was impaired.

Queen's Wharf project delayed again

Image of the Queen's Wharf Redevelopment Project scheduled to open in August. (Supplied: Destination Brisbane Consortium)

"The Labor Party has a serious question that Star has allowed Star to keep his casino license in Queensland.

"The Labor Party has refused to clarify the reasons for further extension of the license suspension and the contents of the correction plan, making the government concerned about sincerity.

"The fact that the Labor Party focuses on open and transparent things rather than hiding the details of this plan, indicates that the Labor Party prioritization is wrong."

The Star Paper Public Relations Officer promised to be a better company.

"We are on a journey to recover the appropriateness, and our improvement plan is to track and fulfill our accountability," a spokeswoman in charge. I mentioned.

The photo shows Queen's Wharf Development and Star Casino wide shot.

Prosecutor Queensland, President of Queensland, announced a penalty two months after a gambling giant decides that it is inappropriate to maintain a casino license in Queensland after a major report. 。

"We promise to be a better company, all we do, operate with the highest level of honesty, from regulatory authorities, governments, shareholders, guests, team members, and local communities. Continue to concentrate on regaining trust. "

Star has been found unsuitable to run casinos in Queensland, but can it still run the Queen's Wharf project?

According to the Gottason report, Star has a serious flaw in the money laundering prevention program, and actively encourages a high roller who is prohibited from entering and exit in Queensland. On the other hand, he lacked frankness and transparency.

In response, the state government ordered Star to pay $ 100 million, appointed a special manager, ordered the company to "organize the body" for one year, and no longer order 90 days of casino license. Ta.

A few weeks after one year, Das announced last year that the License of The Star Gold Coast and Travely Brisbane will be postponed to May 31.

Meanwhile, the Star's QUEENS WHARF project in Brisbane will be postponed for the fifth time, and the $ 3. 6 billion facility will be open in August.

Why is Star on notice?

Last year, the Star newspaper announced that it was scheduled to open in April after the tightness of the construction, but it was postponed for several months.

The Queen's Wharf Project occupies a 1 2-hectares site of Brisbane CBD. (Supplied: Destination Brisbane Consortium)

The Queens Wharf Project will be announced for the first time in 2015, with new casinos, four luxury hotels, more than 50 restaurants and bars, and 1500 housing apartments on the 1 2-hectares site of Brisven CBD.

The project is implemented by the Destination Brisbane Consortium (DBC), which has a 50 % Star, Fur East Consortium and Chaw Thai Hook Enterprises, each owned by 25 %.

In a December ASX statement, shareholders were advised that DBC had reached a Supreme Court settlement with Multiplex Constructions over cost blowouts and delays on the project.

So what happens now?

The Neville Bonar Bridge, completed last year, is among the facilities to open in the first phase, along with a casino gaming floor, The Star Grand Hotel and several restaurants.

Posted Wednesday, 7 February 2024 at 8:04pm Wednesday, 7 February 2024 at 8:04pm Wednesday, 7 February 2024 at 8:04pm

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Star Entertainment Group was told this week it must prove why it should operate a casino in Queensland, casting a shadow over its $3. 6 billion Queen's Wharf development in central Brisbane.

The state government will decide how to deal with Star.

This has raised many questions about Star's future in Queensland and what it means for its vast central Brisbane development, due to partially open late next year.

Star already runs the Treasury Casino on George Street and one at Broadbeach on the Gold Coast.

How have other states handled this?

On Friday, Attorney-General Shannon Fentiman ruled that Star was unfit to hold a casino licence in Queensland after an independent review found "significant deficiencies" in the company.

Retired Judge Robert Goterson concluded that Star had significant deficiencies in its anti-money laundering program for many years, actively encouraged banned high rollers from other states to gamble in Queensland and lacked candor and transparency with bankers and regulators.

The Neville Bonner Bridge, named after Australia's first Indigenous member of parliament, is under construction. ( ABC News: Kym Agius )

He also made recommendations that hint at how the state government could manage Star Entertainment's casino license in the future.

Gotterson said a priority should be to amend Queensland's casino laws to allow a special manager to be appointed to take over the casino license.

The state government plans to serve Star Entertainment with a show cause notice, but it will be several weeks before it is prepared and formally handed to the company.

The development could cost more than $3 billion. ( ABC News: Kym Agius )

STAR will then respond within 21 days to explain what changes will be made in order to prove that the two casinos should be permitted in Queensland.

What does this mean for the Queen's Wharf development?

Later, Fentiman could take various measures, such as instructions, fines, Star's license, and cancellation.

The state has also announced that the fines imposed on casino operators will be raised to $ 100 million.

If the Justice Secretary decides to suspend or cancel the License of Star Casino, it is highly likely that a special manager will be appointed on behalf of the company.

The state government's announcement this week is not the first controversy that hit this development. (ABC News: Kym Agius)

CROWN RESORTS in Melbourne was determined that it was not suitable for holding a casino license as a result of Finkelstein's investigation.

A special manager has been appointed to provide the latest information to state regulatory authorities about the company's reform tasks to monitor the company's operation and maintain the license.

The special manager will submit a final report at the end of next year, and the Victorian government and regulatory authorities will determine whether Crown is appropriate for retrofitting the license.

The final project will include a vast park in the CBD. (ABC News: Kym Agius)

In New Southwales, the Crown Resort has gained permission to open a casino at a luxurious restaurant and a hotel developed by the Crown Resort for $ 2. 2 billion.

Queensland is paying attention to what will happen in the future, as Sydney's Star Entertainment has determined that the Bell survey is not suitable for holding a casino license.

New Southwales and casino regulators are currently considering STAR's answers to reason notifications.

Queen's Wharf's master plan. (Supply: Queen's Wharf Brisbane)

Basically, Queen's Wharf development is almost the same at this stage.

"We promise to be a better company, all we do, operate with the highest level of honesty, from regulatory authorities, governments, shareholders, guests, team members, and local communities. Continue to concentrate on regaining trust. "