Far East Consortium Lays Out Terms of Star Deal and Loan Repayment Confidence

Far East Consortium (FEC) has publicly detailed its restructuring agreement with Star Entertainment Group, clarifying how asset swaps, loan advances and earn-out mechanisms will play out as part of a major shift in their Australian resort joint ventures.

In the deal, FEC and Chow Tai Fook Enterprises (CTFE) will assume full control of the Brisbane precinct via Destination Brisbane Consortium after Star exits its 50 % stake, while Star will take full ownership of the Gold Coast hotel/residential towers via Destination Gold Coast Consortium. 

FEC reports that it and CTFE advanced AU$53 million to Star to assist with liquidity needs, of which AU$35 million was structured as an interest-free loan tied to pre-sales of apartments in the Andaz tower on the Gold Coast plus a hotel operating loan drawdown; FEC says the proceeds of the tower sales are “anticipated … to be not less than AU$35 million, providing sufficient funds for full repayment of the loan.”

Additionally, the agreement allows Star to receive an earn-out payment (up to AU$225 million) based on the value of the Brisbane asset, and puts in place offsets for certain payments (such as AU$8 million owed by Star in relation to a pedestrian footbridge at the Gold Coast project).

For FEC, the key point is that despite Star’s previous financial and regulatory pressures, they remain “confident of receiving loan repayments” under the new structure.