UBS investment bank says Dreamworld parent company Ardent Leisure could be liable for $80m bill in wake of inquest

Shares in Dreamworld operator Ardent Leisure have dipped to a new low after analysts reported it could face an eye-watering bill over the Dreamworld tragedy.

Police and investigators arrive a Dreamworld as the investigation into the Dreamworld ride tragedy continued in 2016. Members of the general public still arrived to pay their respects. Picture by Scott Fletcher

SHARES in Dreamworld operator Ardent Leisure have dipped to a new low after analysts reported it could face an $80 million bill over the Dreamworld tragedy.

Investment bank UBS warned the coronial inquiry into the deaths of Roozi Araghi, Kate Goodchild, Luke Dorsett and Cindy Low on the Thunder River Rapids ride could see it liable for hefty remediation costs.

UBS said challenges to Ardent’s successful US arm, which operates its Main Event businesses, would further soften its results and the bank downgraded its price target on the company by 25 per cent to $1.20.

Ardent shares dropped by 3.37 per cent to $1 this morning, the lowest since changes to its share structure took effect in November last year, removing its former listed company from the exchange.

Dreamworld has focused on bringing visitors back with reinvigorated animal exhibits, including tiger cub, 3-week-old Khan.

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The company’s latest results in February revealed it already spent $5.3 million in the six months to December 25 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 couldn’t reveal whether or not the policies would pay out.

“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,” chairman Gary Weiss said at the 2017 AGM.

New Dreamworld CEO John Osborne. Picture: NIGEL HALLETT

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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 — $6.2 million worse than the same period last year — came off the back of a $38.9 million dive in revenue, largely related to the company’s sale of its marinas and bowling centres.

The result follows a horror previous year for the company, which posted an eye-watering $88.6 million loss for 2017-18. The company did not provide a profit guidance for the full financial year.

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.

“We now expect Ardent to report negligible earnings in fiscal 2020,” the broker said.