Last-minute negotiations between Star Entertainment Group (ASX: SGR) and its joint venture partners in Hong Kong have resulted in an extension of the deadline for the company's pivotal withdrawal from the Queen's Wharf Brisbane project.

Partners Chow Tai Fook Enterprises (CTFE) and Far East Consortium (FEC) have agreed to extend the termination date of their March 2025 heads of agreement to July 31, 2025, according to a statement issued by Star via the ASX on Monday.

A week after the Hong Kong-based investors declared their willingness to back out of the deal, the filing was made.  Despite the respite, investors are reportedly thinking about "dumping" Star for competing casino operators, such as US hospitality and gaming behemoth Delaware North and New Zealand's SkyCity Entertainment, according to a Monday story by the Australian Financial Review.

Take a Chance

In March, CTFE and FEC decided to pay what many experts referred to as a fire-sale price for Star's 50% share in the AU$3.6 billion (US$2.4 billion) venture.

For Star, which has struggled with a severe financial crisis for the last two years, the deal is viewed as a lifeline.  It would allow the firm to refocus resources on its other key assets while shedding a AU$1.4 billion (US$900 million) debt obligation and securing a monthly AU$5 million (US$4 million) operation fee for maintaining the Brisbane casino.

Star suffered significant losses and saw its market value plummet as a result of being investigated in several jurisdictions for corporate governance flaws and anti-money laundering (AML) violations.

According to reports, the casino operator had only AU$79 million (US$52 million) in cash at its lowest point, in late February. This was barely enough to keep things running for another week.

The US gaming company Bally's Corporation (NYSE: BALY.T) and the Mathieson family, the company's biggest current investor, contributed AU$300 million (US$195 million) in capital, which seems to have prevented insolvency.  As long as the final investment arrangements are completed, the US-based operator will acquire the majority stake in the business.

Bally's jitters?

Bally's, however, recently stated that it does not wish to lose authority over Queen's Wharf.  Bally's chairman, Soo Kim, cautioned in an interview with Asian Gaming Brief on Friday that if Australia's financial authority, AUSTRAC, had its way, his company may still withdraw from the rescue agreement.

In November 2022, the agency filed a civil lawsuit against Star for allegedly violating anti-money laundering (AML) and counterterrorism financing regulations.  AUSTRAC is requesting that the ailing casino operator be fined AU$400 million (US$260 million) by a federal court.

Star has cautioned that even a fine of AU$100 million may make it impossible for the company to operate as a going concern.

“One of the conditions precedent to our making the final investment and converting is that the company is solvent,” Kim said.