Ardent Leisure accused of being in ‘dream world’ by activist investor

afr.com:

A battle is brewing for control of Dreamworld theme park owner Ardent Leisure, with activist investor David Kingston requisitioning the company’s share register to drum up discontent over what he claims is poor performance by management.

Mr Kingston has written to Ardent shareholders demanding that the company return its $141 million of idle cash via a buyback to support its ailing stock price, or alternatively, a straight capital return. He also wants Ardent to actively pursue merger and acquisition options, or a sale of key assets including its land.

Dreamworld’s key attractions aren’t pulling enough visitors for one shareholder. 

Ardent issued a profit upgrade on July 10, which Mr Kingston said happened after he requisitioned the share register.

In that update, Ardent said it would deliver its best performance since financial year 2016, when four people were killed on one of the key attractions at Dreamworld. Earnings before interest, tax, depreciation and amortisation excluding one-offs would roughly be at breakeven for the full year.

But Mr Kingston said the visitation was only 1.2 million visitors in financial year 2023 – half the visitors recorded in 2016. “In financial year 2016, Ardent’s theme parks were successful with attendances of 2.4 million visitors, which provided the necessary revenue to deliver EBITDA of $35 million,” he said.

“For a relatively high fixed cost business, the failure to recover anywhere near financial year 2016 attendance levels is a major problem.”

Mr Kingston said Ardent’s $230 million market capitalisation implied its parks and surplus land are valued at only $57 million, after deducting the $141 million in cash and a $32 million valuation on its Skypoint Tower, and adding back the $50