Queen’s Wharf delays threaten Star’s debt refinancing, analysts say
Financial analysts at Jefferies have expressed concerns about Star Entertainment’s ability to refinance its debt due to delays in the construction of its new resort and casino in Brisbane.
Australia.- Jefferies, a financial analyst agency, has expressed reservations about Star Entertainment’s ability to refinance its debt amidst challenges surrounding the Queen’s Wharf Brisbane project.
Due to a tightened cash flow, analysts have predicted potential obstacles in the Queen’s Wharf Brisbane debt refinancing, estimating project completion in the first half of 2025. The delay, announced by the casino operator last June, has pushed the AU$3.6bn (US$2.4bn) resort and casino’s opening to April 2024.
Star holds a 50 per cent stake in the Destination Brisbane Consortium (DBC), a joint venture between The Star, Chow Tai Fook Enterprises, and Far East Consortium.
Construction company Multiplex began building the Queen’s Wharf facility in mid-2019. Recently, Multiplex submitted claims for extra costs, more time to complete the project, and compensation for damage. Finally, Star and its partners agreed on a settlement, which can help move the project forward.
However, Jefferies warned that 25 per cent of interest costs from the AU$1.6bn (US$1bn) project debt are still unhedged.
The Queen’s Wharf Brisbane development will include four luxury hotels, 50 new bars and restaurants, a retail area, up to 2,000 residential apartments and the equivalent of 12 football fields of public space. It is expected to host 2,500 slot machines.
In its financial results for the fiscal year 2023, The Star Entertainment Group reported that its net loss grew from AU$203m in the prior year to AU$2.44bn (US$1.57bn). The company reported a 22 per cent year-on-year increase in gross revenue to AU$1.86bn (US$1.20bn) and a 34 per cent increase in EBITDA to AU$317m (US$204m).
