Despite the economic fallout caused by the coronavirus, Star Entertainment Group isn’t deterred in its goal of building the massive Queen’s Wharf (QWB) casino resort in Brisbane. Expected to cost as much as $2.3 billion, the casino operator started looking for financing well before the current pandemic. If there was a chance that the funding would be lost as a result of the impact from the coronavirus, it can now be dismissed, as Star has confirmed that it has picked up AUD$1.6 billion ($1.3 billion) to keep the project moving forward.
The money had already been arranged prior to the global COVID-19 outbreak, and it would not have been surprising if the deal had died as the global casino industry is set to lose hundreds of millions of dollars. However, Star confirmed in a filing (in pdf) with the Australian Securities Exchange (ASX) last Friday that the funding is still intact, and that it has successfully executed the facility agreements related to the transactions. It explains, “The Star and its joint venture partners in the Destination Brisbane Consortium have now executed facility agreements for the QWB Funding on terms consistent with the commitments received. Thee terms were agreed prior to the COVID 19 pandemic and therefore reflect terms available in the market at that time. Conditions precedent for the QWB Funding are expected to be completed in June 2020, including relevant final approvals from the Queensland Government.”
The first installment of funds is expected to be handed over sometime next month, with a larger chunk to be provided early next year. The loan has a period of 5.5 years, which, according to Star, will give it three years of operating history before refinancing may be required. The money is “in proportion to the partners’ equity interests,” which is broken down into three parts – 50% held by Star and 25% held each by Chow Tai Fook and Far East Consortium out of Hong Kong.
Star isn’t the only Australian-based gaming-focused company to receive some positive financial news recently. Aristocrat Leisure Limited, the gaming equipment manufacturer and supplier, has picked up a new $500-million Term Loan B (TLB) product that it hopes will help it counter the losses incurred by the coronavirus. The loan will mature in 2024, and is expected to be formalized by the middle of this week.