Portugal Colonial - Australian casino firm strikes deal to avoid liquidity crunch

Shares in the group, which employs more than 8,000 people, have been suspended from trading since March 3 after it failed to post half-year financial results citing liquidity woes.

Star's business -- including casinos, bars, restaurants and hotels at resorts in Sydney, Brisbane and the Gold Coast -- has been hovering close to entering administration.

The firm said Friday evening it had reached a binding heads of agreement with two Hong Kong-based joint venture partners -- Chow Tai Fook and Far East Consortium -- to get much-needed liquidity.

Under the deal, Star will relinquish its 50-percent stake in the Brisbane casino resort to its partners while gaining full ownership of the Gold Coast operations, it said in a statement to the Australian Securities Exchange.

The deal provided the troubled group with an upfront cash payment of Aus$53 million (US$33 million), with Aus$35 million of that already received Friday.

"The Star intends to use these proceeds for short-term liquidity purposes as it seeks to implement other liquidity initiatives," the company said.

The agreement was subject to various conditions including gaining regulatory approval.

Star said it had separately signed a financing commitment for a bridge facility of Aus$250 million with investment firm King Street Capital, and it was also negotiating a larger debt refinancing proposal with a potential lender.

The casino firm last traded at Aus$0.11 a share with a market capitalisation of Aus$316 million -- a far cry from its Aus$5 billion-plus value of seven years ago.

Its finances were squeezed by the cost of developing the Brisbane resort, the threat of an anti-money laundering fine, and stricter regulation in the industry, according to the Australian Financial Review.

The company has previously been accused of not adequately policing criminal infiltration and doing little to vet the sources of money coming into the business.

F.Cardoso--PC