July 7 (Reuters) - Australia's Star Entertainment

said it had secured a last-minute reprieve from Hong

Kong investors who had threatened to abandon their Queen's Wharf

casino deal, with both sides agreeing to extend talks beyond a

looming five-day deadline.

Chow Tai Fook Enterprises and Far East Consortium ( FRTCF ),

holding 25% each in the project, had issued a termination notice

last Monday, threatening to walk away from their agreement to

buy Star's remaining 50% stake unless conditions were met within

five business days.

The Hong Kong firms agreed Monday morning to "a set of

principles under which there will be certain departures from the

heads of agreement", Star said, extending the termination

deadline to July 31 to allow parties to finalise long-form

documents.

Shares in Star fell as much as 3.85% to A$0.125, as of 0024

GMT, while the broader benchmark traded largely flat.

Far East Consortium ( FRTCF ) in a separate statement said discussions

over the past week focused on "matters principally relating to

the orderly transition of the management of the Queen's Wharf

project, to ensure certainty for the JV partners and other

relevant stakeholders in facilitating the exit of The Star from

the equity and management of the project."

However, Star will face financial penalties if the deal

collapses. The casino operator must repay A$10 million ($6.55

million) it received from the Hong Kong partners within 30 days,

and reimburse them for their share of equity contributions made

to Brisbane's new Queen's Wharf casino and hotel complex since

March 31.

Star's shareholders, late in June, backed a A$300 million

bailout package designed to keep the struggling casino operator

afloat. The rescue effort is spearheaded by the U.S. gaming

company Bally's Corp in partnership with the Mathieson

family, Star's biggest existing investor.

($1 = 1.5272 Australian dollars)