Chow Tai Fook and FEC now have full control of the casino project (Image: Queen’s Wharf Brisbane)
More than a year after agreeing to take over a Brisbane casino project from a troubled gaming operator, Far East Consortium and Chow Tai Fook Enterprises have taken full ownership of the A$3.6 billion ($2.5 billion) development after guaranteeing the state government that they would keep construction on schedule.
The Hong Kong partners have guaranteed the Queensland government that they would “complete the Development and pay compensation to the State for any breach,” while also indemnifying the state against any losses,” according to a filing by Far East on Tuesday, with the notice to the HKEX indicating that both shareholders were required to provide the guarantee to the government.
The deal commits Far East and Chow Tai Fook to an estimated A$496.4 million in remaining development costs, and comes after financially troubled operator Star Entertainment agreed in March last year to sell the waterfront property to stave off collapse. Far East sees the acquisition setting the partners up to benefit from rising tourism in Australia’s third-largest city, as the Queensland capital prepares to host major international events in the years following the project’s expected 2029 completion.
“The Group is positioned to fully deliver on the project’s growth potential, particularly in light of Brisbane’s designation as the host city for the 2032 Olympic and Paralympic Games. The Development strengthens the Group’s presence in Australia’s premium integrated resort and hospitality sectors,” Far East said in its statement.
Asset Swap Still Underway
The change in control of the casino project follows through on the commitment made last year under which Chow Tai Fook, the private holding company of the Cheng family behind HKEX-listed New World Development, and tycoon David Chiu’s Far East agreed to a multi-faceted swap with Star, an operator in which the two Hong Kong firms each held around 3 percent stakes.
Chow Tai Fook Enterprises chairman Henry Cheng is big on Brisbane (Getty Images)
Under the terms of the deal, Chow Tai Fook and Far East agreed to pay Star A$53 million in cash for the Brisbane complex and related businesses. In the announcement on Tuesday, Far East said the Hong Kong partners will be taking over Star’s Treasury Hotel in Brisbane along with an associated car park, and a 50 percent stake in a car park on Brisbane’s Charlotte Street, no later than 31 March 2027.
As part of the original deal, the Hong Kong partners also agreed to hand back to the casino operator their 66.67 percent interest in an entity holding the Dorsett Gold Coast hotel and the soon to open Andaz Gold Coast, with that transfer now expected to take place in the second half of this year.
Far East may record a gain before tax of HK$1.01 billion, once all the remaining parts of the transaction are finalised, assuming they are completed within this year, the company said.
Star Under New Management
Completing the Queen’s Wharf part of the deal allows Star to go ahead with a refinancing package from creditors to restore its finances, the cash-strapped Australian casino company said in a statement.
Star also agreed to cut the management fee it agreed last year with the Hong Kong investors by more than two-thirds, from A$5 million a month to A$18 million annually. The agreement between Star and its Hong Kong partners has also been updated to allow Far East and FEC to terminate the casino management agreement with the operator on 90 days written notice, should it fail to reach agreed performance criteria.
Star said in August it expected to complete its exit from Queen’s Wharf by the end of November last year. In April last year the casino operator agreed to an A$300 million rescue package with US gaming giant Bally’s, which installed new management in December.