Star also told investors it had received overtures from its Chinese partners – Chow Tai Fook Enterprises Limited and Far East Consortium International Limited – to pick up a 50 per cent stake in the company’s Queen’s Wharf casino in Brisbane. More than 8000 jobs are on the line, with the company running out of time and money to keep its casinos open. The financial crime watchdog says the court should disregard casino operator’s threat that it would collapse under the weight of a $400 million fine. The casino operator has been negotiating with its lenders over changes to covenants on borrowings of more than $400 million. The NSW Independent Casino Commission (NICC) also announced it had given Bally's the necessary approvals to become a substantial shareholder of The Star. Combined the two companies will own more than half of the embattled casino operator. American casino giant Bally’s Corporation and the billionaire Mathieson family are waiting on probity approvals to take control of Star, which has faced extreme financial pressure over the past 18 months.
Morningstar lowers our Uncertainty Rating from Extreme to very high after the results of the second bell inquiry were passed down. The scrutiny into Star’s suitability to hold a casino licence ended in the best plausible outcome that the company could have hoped for. Whilst they are currently deemed unsuitable to hold a casino license, the enquiry ruled that the license need not be revoked entirely. Queensland is currently the only state where Star holds an exclusive position and consequently the company is throwing substantial amounts of capital (~$3 billion) in ensuring it stays that way. The Queen's Wharf joint venture development in Brisbane commands $2.6 billion of the spending with a 99-year lease and 25-year exclusivity period. Morningstar expects the extensive capital investment in Queensland to weigh on the near-term returns on invested capital.