FEC completes Star deal, assumes risk on $160 million Brisbane project

Far East Consortium International (FEC) has completed its acquisition of a 50% stake in the Queen’s Wharf Brisbane integrated resort, while also committing to a completion guarantee of AUD 248.2 million (around $160 million) tied to the project’s delivery.

FEC acquired their stake through an asset transaction with Star Entertainment Group, becoming an equal partner with Chow Tai Fook Enterprises in the Destination Brisbane Consortium (DBC), providing both parties joint control of one of Australia’s largest integrated resort developments.

Under a restructured agreement with the Queensland government, FEC has guaranteed its 50% share of the developer’s obligations, which could result in FEC being responsible for compensating the state if the project fails to fulfill its obligations or successfully complete the new developments.

The guarantee will remain in place until such time as all obligations pursuant to the contract have been met and covers approximately 50% of the remaining development costs. Timeline modifications have now extended the expected completion of the project to December 2029.

If approved, the transaction qualifies as a discloseable transaction requiring only a public announcement; however, if not, it will be classified as a major transaction subject to more stringent disclosure and approval requirements from shareholders.

FEC expects to realize a pre-tax gain of approximately HKD1.01 billion (USD 129 million) from the transaction subject to further adjustments.

Overall, the transaction makes FEC better positioned to capitalize on hosting the 2032 Olympic Games in Brisbane; however, it increases their risk of loss through direct oversight over the risk of delivery for the two joint owners.

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