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Ardent Leisure facing potential $80 million liability in wake of Dreamworld inquest

Ardent Leisure facing potential $80 million liability in wake of Dreamworld inquest
June 28, 2019

Shares in Dreamworld operator Ardent Leisure have dropped to a new low this week after analysts suggested it could face massive financial liabilities over the 2016 Dreamworld tragedy.

Investment bank UBS warned the coronial inquiry into the deaths of four guests on the Thunder River Rapids ride in October 2016 could see it liable for hefty remediation costs.

UBS said challenges to Ardent’s successful USA Main Event division, would further soften its results and the bank downgraded its price target on the company by 25% to $1.20.

As reported by the Gold Coast Bulletin, Ardent shares dropped by 3.37% to $1 on Monday, the lowest since changes to its share structure took effect in November last year, removing its former listed company from the ASX.

The company’s latest results in February revealed it already spent $5.3 million in the six months to 25th December on “Dreamworld incident costs”, after insurance payments had been taken into account.

The Coroner’s report into the tragedy is expected in coming months.

Ardent has previously told shareholders it was insured for the type of tragedy that claimed four lives, but did not reveal whether or not the policies would pay out.

Ardent Leisure Chairman Gary Weiss said at the group’s 2017 AGM “there are levels of insurance cover in place but, obviously it’s a highly sensitive issue and I’m not at liberty to elaborate further.”

Ardent logged a $21.8 million loss for the first six months of the financial year as costs from the 2016 tragedy continued to drag on the company’s bottom line.

The losses resulted from a $38.9 million dip in revenue, largely related to the company’s sale of its marinas and bowling centres.

In April, Ardent announced it would borrow $225 million through Main Event, using part of the refinanced funds to pay off the company’s bank loans, which its half-yearly accounts said were $97.6 million.

Ardent said $80 million cash would support investment in theme parks.

UBS said delays to both the findings of the coronial inquiry into the Dreamworld incident and the launch of the Sky Voyager ride would affect the company.

Image: Dreamworld's former Thunder River Rapids Ride.

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13th May 2019 - Dreamworld Tiger Cubs make first public appearance

8th April 2019 - Ardent Leisure borrows $225 million for attractions investment

21st March 2019 - Dreamworld launches new Training Academy to support staff career progression

13th March 2019 - Ardent Leisure shares hit seven-year low

7th March 2019 - Dreamworld advises appointment of safety engineering expert

22nd February 2019 - Village Roadshow report rising earnings and record-breaking January period for theme parks while writing off Dreamworld as competition

22nd February 2019 - Ardent Leisure losses rise as guests fail to return to Dreamworld

7th December 2018 - Dreamworld reputation savaged at inquest

23rd October 2018 - Ardent Leisure names casino and hospitality professional as new Dreamworld Chief Executive

15th September 2018 - Commercial trampoline centre operators struggle to secure insurance

9th November 2016 - Dreamworld announce ‘permanent closure’ of ride involved in fatal incident


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