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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.

A coroner’s report into the tragedy is expected in coming weeks.

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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