New Ardent CEO Simon Kelly prepared for wild ride

Just weeks from taking power at Ardent Leisure, incoming CEO Simon Kelly is already under pressure from shareholders.

Incoming Ardent Leisure chief executive Simon Kelly in Sydney yesterday. Picture: Renee Nowytarger.

Just weeks out from assuming power at Ardent Leisure, incoming CEO Simon Kelly is already under pressure from shareholders unhappy with the company’s dismal performance.

In his first interview since his appointment to the troubled entertainment group, Kelly left the door open for a sale or re­development of its troubled flagship, the Dreamworld theme park on the Gold Coast, adding that everything is for sale at the right price.

The former Nine Entertainment chief financial officer said he had been headhunted by Korn Ferry for the Ardent role, and was not averse to overseeing a major shake-up of the company’s 38 Main Event businesses — predominantly based in Texas — to get the company back on track.

“There are no sacred cows as far as I am concerned,” Kelly told The Australian yesterday.

Ardent, which was spun out of investment bank Macquarie Group as a vehicle for a series of tourism and leisure assets, reported a $49.4 million loss in the December half. It slashed almost $100m from the value of Dreamworld, with the park’s slow recovery from last year’s tragedy, in which four people died, still weighing on its stock. The accident, which remains under investigation, has also affected other Gold Coast theme park operators, including Village Roadshow, which recently warned of a downturn in visitor numbers at its Warner Bros. Movie World and Sea World theme parks.

Earlier this month, Ardent posted another downbeat trading update, saying the theme park division would lose up to $4m this year.

Once a contender for the Nine CEO position, Kelly will replace former magazine editor Deborah Thomas in the chief executive’s role at Ardent from July. In an unusual move, Thomas will remain at Ardent in a senior executive role. Kelly says he is not fazed by having the former chief executive continue in the company. “Deborah is going to take carriage of the recovery of Dreamworld and the coronial inquiry. To have someone like Deborah who has been through it and is prepared to take carriage of that is very valuable for me, because it doesn’t divert me as a new CEO. We get along just fine.”

Yesterday, he announced a major review of the business in response to requests by shareholder Ariadne to install their own executives on the board.

Ariadne, which owns 7.9 per cent of Ardent Leisure, wants to put corporate raider Gary Weiss and Queensland property developer Kevin Seymour on the Ardent board in a bid to turn the company around.

In response, Ardent announced a review of its Main Event businesses, coupled with a review of Dreamworld’s 60ha landholding on the Gold Coast corridor which could be sold off or developed into a hotel, residential apartments or houses.

Ardent is also weighing up plans to recruit two US-based non-executive directors to the Ardent Board because most of its growth is in the US, initiating an international search process.

Kelly says he is not concerned by the Ariadne plan to appoint Weiss and Seymour to the board.

“I would not imagine they are trying to do a special deal. I believe they have good intentions,” Kelly says.

Privately, he believes that if Weiss and Seymour were planning an Ariadne takeover with another key shareholder in tow any appointment to the board would put them in conflict.

Kelly, who has been a shareholder of Ardent Leisure for 15 years, says both Weiss and Seymour could see upside in the company. “(But) I don’t know if they are there to do anything more than raise that upside in the business.”

Ariadne has undertaken its own review of the company, with the aid of investment bank Investec, and formed its views on how the business could be turned around and how to unleash value from its assets. Kelly, who has previously worked for Goodman Fielder, Aristocrat Leisure and for Virgin boss John Borghetti in a consultancy role when Air New Zealand was offloaded its Virgin Australia stake last year, readily admits there are problems with Ardent Leisure.

“The business has been going through some growing pains. When you grow (fast) in a short space of time you need wholesale changes in the company’s expertise and systems,” he says.

“We do need to have a pause and a stand back and say, what is the right way to execute this ­opportunity? What lessons have we learned?”

Kelly says he has a strong track record of working with companies that have endured downturns in their value. “I had six or seven roles at Goodman Fielder, I worked for Aristocrat, which was in crisis when I joined and is now a market darling, and I joined Nine when it was nearing insolvency.

“I am very strong on leadership, oversight, and driving shareholder-friendly outcomes.”

His former boss at Nine, David Gyngell, says Kelly will do well at Ardent. “I think he will do a very good job. He is a very good businessman and he has a good grasp of what drives business,” Gyngell told The Australian last night. “He understands shareholder value.”

Gyngell believes turning Dreamworld around will be challenging, but possible.

“Mr Kelly knows where to spend money to get the best returns for shareholders, he understands the capital markets and if he does not understand operational issues he is the first one to ask.

“At Nine I ran the strategy, the content and sales, knowing the dark arts of the media, whereas Simon ran the business day to day. He was more of a chief operating officer with me while I had the chairman-type proprietary role.

“Simon will know what Dreamworld is worth and can answer questions such as ‘do you sell the land, lease it back, or put money into America?’.

“That is his sweet spot; he will get it better than most. I am biased but I think very highly of him. He’s a good hire and shareholders will get the benefit out of him.”