Queen’s Wharf Brisbane opened last August after a series of delays
An Australian casino operator backed by the Cheng family controlling Hong Kong’s New World Development revealed Wednesday that its available cash fell 47 percent in the three months to 31 December, throwing doubt on its future as the company faces an impending fine for breaches of counter-terrorism and anti-money-laundering laws.
Star Entertainment Group, which is backed by Chow Tai Fook Enterprises, the private holding company of New World chairman Henry Cheng, as well as Hong Kong’s Far East Consortium, said in a filing with the Australian Securities Exchange that its ready cash amounted to A$79 million ($48.9 million) at the end of calendar 2024, down from a previously reported A$149 million on 30 September.
The latest cash figure includes the impact of drawing down the first A$100 million tranche of a A$200 million debt facility announced in September. Star’s access to the second A$100 million tranche is contingent on fulfilment of certain requirements, including the raising of at least A$150 million in additional subordinated capital.
Star said the cash burn reflected the continued difficult trading conditions highlighted at the annual general meeting on 28 November, when CEO Steve McCann noted the group’s “extremely challenging position”. The company also pointed to costs associated with last year’s opening of Queen’s Wharf Brisbane and the fines imposed after investigations turned up evidence of fraud, money-laundering and foreign interference at Star’s casinos.
“In addition to seeking to fulfil the conditions precedent for Tranche 2 of the new facility, the group continues to explore other liquidity solutions,” Star said Wednesday.
Stock Tumble
Star’s ASX-listed shares plunged more than 33 percent in Thursday trading to an all-time low of A$0.13. The stock has lost 96 percent of its value since Star’s IPO in 2011, when the company was known as Echo Entertainment.
Henry Cheng, chairman of New World Development and CTF Services
Star warned in April 2023 that it was experiencing “a significant and rapid deterioration in operating conditions” driven by the impact of regulatory restrictions and exclusions — including suspension of the company’s Sydney casino licence — and emerging weakness in consumer discretionary spending.
A month earlier the group had completed an A$800 million ($545 million) capital raise to repay debt and increase liquidity amid stiff competition from rival Crown Resorts. Both Far East Consortium, chaired by second-generation tycoon David Chiu, and Chow Tai Fook, the parent group of the Cheng family’s New World Development, took part in the fundraising, accepting a 3-for-5 rights offer to contribute $80 million.
In August of that year, Star was sued for A$420 million in a Queensland court by the contract builder of Queen’s Wharf Brisbane over extensions of time, relevant milestone dates, liquidated damages and other matters. The project company is half-owned by Star with 25 percent stakes held by FEC and Chow Tai Fook.
Star announced in June 2023 that the A$3.6 billion integrated resort’s opening date had been pushed back for at least the fourth time, from the second half of 2023 to April 2024. Star reached a settlement with contractor Multiplex in December 2023, and the facility finally opened its doors in August of last year.
Star’s corporate records show that FEC and Chow Tai Fook each hold a stake of a little over 3 percent in the ASX-listed group.
Empire in Turmoil
Chow Tai Fook’s wobbly bet on Star adds to the turmoil engulfing cash-strapped New World Development, whose HKEX-listed shares have sagged nearly 30 percent since a November announcement that the builder was naming a new CEO for the second time in just over two months.
Third-generation scion Adrian Cheng had stepped down as chief executive in September after New World posted its first full-year loss in two decades. Cheng’s successor in the role, Eric Ma, resigned in late November and was replaced by New World China Land CEO Echo Huang.
Bloomberg reported last week that the Cheng family’s infrastructure arm was seeking to sell toll roads in mainland China worth about $2 billion. That news came one month after New World disclosed plans to sell its entire interest in a sports complex at the former Kai Tak Airport site to Chow Tai Fook for HK$416.7 million ($53.5 million).
Leave a Reply