The cash-strapped parent company of a consortium with exclusive rights to negotiate a $3bn casino development with the Queensland government could risk collapse without more investment backing, auditors have warned.
ASF, the sole owner of a consortium vying to develop a casino resort on the Gold Coast, holds just $6.25m in cash after losing $93m of $102m raised from investors, according to its half-yearly accounts.
Auditors Grant Thornton, in filings with the Australian stock exchange last week, drew attention to a section of ASF’s financial statements “that describes conditions which may cast significant doubt about the consolidated entity’s ability to continue as a going concern”.
Grant Thornton partner Matthew Leivesley said ASF’s ability to “continue as a going concern” would depend on it “achieving sufficient profitability” and raising more funds “in the future to support the working capital needs”.
ASF in a note to its financial statements had referred to the risk of collapse only in the “unlikely scenario that the group is not able to obtain additional capital as and when required”.
In a report signed off by the ASF chair, Min Yang, the group said it had a “long and proven track record in raising capital”. This included a $5m convertible loan at 10% a year from Star Diamond Developments Limited last September.
The Queensland government has promoted ASF’s proposal for a “world-class casino” with five high-rise towers on the Southport Spit.
Asked about fresh financial questions around a major proposal for the Gold Coast, Donna Gates, the city’s deputy mayor, said she expected “the state government will do its due diligence about [ASF’s] ability to deliver as part of the whole process”.
The plans have been long opposed on various grounds by local community group Save Our Spit Alliance, which has previously raised issues about the corporate structure and wherewithal of ASF with Queensland’s Department of State Development.
Steve Gration, the president of the community group, said the latest financial report raised questions about the diligence of the government’s previous probity checks.
“It’s interesting that a company that has capital of less than $6m, that has only five employees that we can locate – and they’re all directors of the company – is wanting to take on coalmining, property development, and in particular this integrated resort development,” Gration said.
“That’s with no experience, no staff, limited expertise and certainly no capital to invest of their own.
“We’ve been informing the Department of State Development over four years that financially, they are a shell company that seem to trawl for projects in Australia and either on-sell them or invite more financial companies, in particular Chinese state government companies, to join them once they’ve got the green light projects.
“We think it’s a very dubious way for governments in Australia to do business.”
A spokesman for the Queensland Department of State Development said the government would take into account the financial capacity of members of the ASF Consortium – a wholly owned subsidiary of ASF – when weighing up the casino proposal.
“In assessing the commercial viability of the consortium proposal, the government will consider the financial capacity of individual members as well as the wider consortium,” the spokesman told the Australian.
One-time Newman government MP Alex Douglas, a vocal critic of the casino proposal, said ASF’s low current cash reserves were less significant than they might seem as “there’s never been any money there”.
“But when it comes down to it, those companies [backing ASF as investors] will put the money up,” he said.
Douglas said the state government should be wary of allowing ASF to claim freehold land “for nothing” under a loophole that allows a developer to claim it in certain circumstances when the footprint of buildings encroaches into the space beyond the Spit shoreline.
“This is all about a land grab. I’ve actually got no objection now to building something but build it on leasehold land, don’t let them try and claim freehold land,” Douglas said.
Gates said she was unaware of issues around freehold land as the council had not been briefed yet by the state government about the proposal’s latest form.
“Anything that creates the level of employment that’s being suggested will obviously be welcome on the Gold Coast,” Gates said.
“But the specifics of that particular project are not clear to the council at this point in time. I’m hopeful that the state and council can work together to master plan that area because it seems to be a priority for the community.
“I think everyone is united in wanting to ensure that [the Spit] remains available for community access into the future.”
