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The Star extends Hong Kong alliance

Casinos operator Star Entertainment Group says its deeper strategic alliance with two Hong Kong property, hotel and retail giants is transformative for the company because it will help attract more visitors from key markets in Asia.

The Star will expand its partnership with Chow Tai Fook Enterprises (CTF) and Far East Consortium International (FEC), which have agreed in principle to further develop The Star's properties in Sydney and the Gold Coast.

CTF and FEC are already partners with The Star in the development of the Queen's Wharf casino and resort in Brisbane, and recently participated with The Star in the acquisition of the Sheraton Grand Mirage hotel on the Gold Coast.

The parties have also established a more detailed marketing alliance, and CTF and FEC will each take a 4.99 per cent stake in The Star for $245 million, or $490 million in total, through the issue of new shares at $5.35 each.

CTF and FEC will apply to NSW and Queensland gaming authorities for the right to increase their aggregate shareholding to more than 10 per cent.

There will be no change to Star's board as a result of the share placement.

The potential aggregate future shareholdings of CTF and FEC are to be capped at 19.9 per cent.

The Star chief executive Matt Bekier says the marketing alliance in particular will benefit The Star.

"I think our future really is closely tied to the growth of Asian tourism," he told AAP on Thursday.

"And us being able to work with these large partners to build marketing capability and access a large customer base in those areas - that is, in fact, transformative.

"The additional property development - that's great to have - but we would have gotten to that over time anyway."

Mr Bekier said none of the potential developments under the alliance is dependant upon changes to gaming concessions.

The Star said that the stronger alliance with CTF and FEC will enable the company to lift its dividend payout ratio to shareholders, starting from the final dividend for fiscal 2018.

Shares in The Star were five cents, or 0.95 per cent, higher at $5.33 at 1131 AEDT.

The Star, CTF and FEC have agreed in principle to pursue the construction of up to five mixed-purpose towers and expanded entertainment, tourism and retail development at the Gold Coast property.

"The Gold Coast is one of the premier global destinations for the Chinese tourist," Mr Bekier said.

"It's a fantastic opportunity because we have a large property that resonates in the market - it's close to retail, it's close to the beach, we manage the convention centre next door.

"It's the big sleeper in our network, with very big potential."

The parties may also pursue the development of a new light rail station at Pyrmont in Sydney, in potential partnership with the NSW government and other stakeholders, to help transport visitors to the The Star casino.

Mr Bekier said the potential developments were options, not obligations.

The strategic alliance also provides exclusivity arrangements for Star on any new casino or gaming developments pursued by its HK partners in Australia or New Zealand.

Austrlaian Associated PressBack to Breaking News

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