Hong Kong-Backed Star Entertainment Sued for $270M by Brisbane Casino Contractor

Australia’s Star Entertainment Group has been sued in a Queensland court by the contract builder of a Brisbane resort and casino project co-owned with Hong Kong-based partners Chow Tai Fook Enterprises and Far East Consortium.

The claim by Multiplex Constructions seeks various declarations from the Supreme Court of Queensland regarding extensions of time, relevant milestone dates, liquidated damages and other matters, including potential sums payable, in connection with the Queen’s Wharf Brisbane contract, ASX-listed Star said Monday in a release.

Multiplex’s claims amount to as much as A$420 million ($270.4 million), according to court documents seen by the Australian Financial Review. The project company, Destination Brisbane Consortium, has been in talks with Multiplex over the claims, which DBC has disputed.

“The Star understands that DBC intends to defend the proceedings and The Star will keep the market informed upon filing of DBC’s defence and any counter claims,” Star said.

Grand Opening Delayed

DBC, a joint venture half-owned by Star with 25 percent stakes held by Chow Tai Fook and FEC, also has claims against Multiplex for delays in achieving key milestones under the Queen’s Wharf Brisbane contract.

Star announced in June 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.

“The revised opening date follows careful consideration of current progress by our builder,” CEO Robbie Cooke said at the time. “Queen’s Wharf has not been immune from the types of pressures that other major infrastructure projects across Australia have encountered.”

Surging demand and constrained supply drove insolvencies in Australia’s construction industry to a decade-plus high of 2,213 in the year to June, AFR reported.

The riverside complex in the Queensland capital’s central business district promises 1,000 premium hotel rooms; up to 2,000 residential apartments; 50 restaurants, bars and cafes; and world-class gaming facilities to replace Star’s existing casino at the site.

Star said it had “received the keys” to several dining, entertainment and gaming areas of the resort from Multiplex in June, representing the first handover of control for an area within the construction zone. The Sky Deck, featuring a 250 metre (273 yard) open-air rooftop runway of bars and restaurants, was also nearing completion.

Wheel of Misfortune

Star warned in April 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 a A$800 million ($545 million) capital raise to repay debt and increase liquidity amid stiff competition from Australia’s top casino operator, Crown Resorts.

Both FEC, 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. Star’s corporate records show both Chow Tai Fook and FEC as among the casino operator’s largest shareholders, with each company holding just under a 5 percent stake.

Rocked by investigations that turned up evidence of fraud, money-laundering and foreign interference at its casinos, Star posted a A$1.3 billion loss for the half-year ended last December. Full financial-year results will be released on 29 August, Star said.