Dreamland bosses say it is “business as usual” at the park following news that funders Arrowgrass Capital Partners plans to close down.
However, park operators Sands Heritage Ltd also say they will remain in contact with the hedge fund as arrangements are made for the sell-off of Arrowgrass investments and outstanding loans.
Arrowgrass bought out Dreamland shares to bring the park out of administration in 2017. The park lease remains under Sands Heritage Ltd.
The firm has made the decision after a slump in capital and requests from investors to withdraw funds, according to a report by Bloomberg news. It comes on the heels of a legal wrangle over the exit of a senior executive.
Arrowgrass made an investment of circa £25million prior to Dreamland’s reopening in May 2017, bringing operator Sands Heritage out of administration in October of that year.
Further Arrowgrass investment, including the purchase of flats in Arlington House, discussions to take on the freehold and properties surrounding the park, followed.
Properties at Arlington flats, Marine Terrace and Belgrave Road are held under various branches of AG Propco Margate Ltd.
In February this year plans to build a 124 bed hotel on Margate seafront were approved by Thanet council.
The application was submitted by Margate Estates, the parent company for Dreamland following the Arrowgrass buy-out of shares of Sands Heritage Ltd.
‘Divestment process’
A Dreamland spokesperson said: “Arrowgrass Capital Partners LLP (“Arrowgrass”) has announced that it is closing Arrowgrass Master Fund Ltd (“AMFL”). This will, in due course, entail the divestment of the investment positions currently held in AMFL.
“AMFL is an investor in Margate Estates Limited and its subsidiary company Sands Heritage Limited (“SHL”), which operates Dreamland Margate.
“Dreamland Margate’s park and venue operations will not be affected by this process, and it is business as usual.
“Arrowgrass has confirmed that the divestment process will be focused on obtaining appropriate value for AMFL’s investors over time. SHL is and will remain in regular contact with Arrowgrass throughout this process.
“Arrowgrass was instrumental in funding Phase 1 of Dreamland’s development, investing in new rides and in the transformation of the park. Dreamland has had its busiest year to date, and SHL is excited to be entering Phase 2 of Dreamland’s continued growth strategy to create a varied accommodation offering in Margate and a 365 day event business for Dreamland.
“Dreamland Margate is enjoying its busiest year since opening in 2015, with more than 650,000 visitors in 2019. Just over 310,000 people visited the park across the summer, bringing the total number of visitors to 650,000 by 2nd September – more than double any previous year’s attendance. The park is looking forward to its centenary year celebrations in 2020.”
It is believed Arrowgrass will sell off current loans made to the park to another fund.
Court case
The investment in Dreamland has been raised in legal papers to the New York Supreme Court. The case lodged by former Arrowgrass investment fund manager Michael Edwards against the firm, highlighted by blogger Ian Driver, was initially submitted in August.
Mr Edwards cites breach of contract, breach of the implied covenant of good faith and fair dealing and fraud.
In papers Mr Edwards claims: “Niell (Nick Niell, Arrowgrass founder) also pushed the firm to invest in a coastal amusement realty project in the UK known as “Margate. ‘ Margate consumed substantial Arrowgrass capital, management time and resources, at the expense of the firm’s general and limited partners . The project was well outside the norm of Arrowgrass investment strategies. It was, however , a project of substantial personal interest to Niel!. Niell owned and continued to purchase for himself and non-Arrowgrass confederates substantial property holdings surrounding the Margate project and thus stood to benefit personally from Arrowgrass investment in Margate – an obvious conflict of interest. It too proved to be financially disastrous for Arrowgrass.”
However, Arrowgrass denies the claims and has accused Edwards of ‘inappropriate risk taking’ saying the firm had to get another senior manager to chaperone his activities. He was eventually demoted and then exited the company.
Arrowgrass say in the court papers that Mr Edwards had Code of Ethics violations concerning sale of securities for his own account. The firm has submitted an application to the court to dismiss the case brought by Mr Edwards and are also seeking damages.
Dreamland freehold sale
On August 1, Thanet council Cabinet members approved in principle the sale of the freehold for the entire Dreamland site -including the council car park– to Margate Estates/Arrowgrass subject to agreement from external funders regarding the removal of ongoing grant obligations upon the council, and subject to legal advice.
Margate central ward councillor Rob Yates says he has now written to Thanet council’s chief executive Madeline Homer to suggest putting the Dreamland estate freehold sale on hold.
He said: ” I have sent an email to Madeline Homer and others in TDC suggesting the closure of the hedge fund could be a valid reason under the consultation to put the sale on hold, and I have asked for an urgent update from TDC before the consultation finishes on September 25 and our assets are sold.
“If SHL is sold to another hedge fund, they may have different priorities and a different strategy and it’s only fair that we understand what that is, before fully owned TDC assets of the Dreamland cinema building, Sunshine Cafe and the car park are sold.”
Thanet council says the developments will have no impact on negotiations for the freehold sale.
Another twist in the council sell-off of Dreamland. The sale must be put on hold whilst investigations are made into the profile of the Arrowgrass buyers.
That potential buyer could be interested mainly in development which is not what Dreamland wants. We need a Covenant of some sort to keep the grounds as a theme park for the tourism it attracts to Margate. Without Dreamland there is very little in Margate to attract tourists. We cannot risk selling it into that rocky road to oblivion.
When will we get a defined ownership of our beloved Dreamland?
Madeline homer and her Mr simp son when will they get the push
You cannot agree to allow an offshore leaks company to have anything to do with our town.
Now do the job of leaving
This is exactly why the freehold to the park must be retained. By all means sell a longer lease to protect the investment by the leaseholders. Sell the freehold for the hotel site on the front as that isn’t part of the heritage, but keep the park and the car park so that they don’t get houses on them in a few years. The Manston debacle would not have occurred had the freehold not been sold to make a quick buck without caring about the consequences of the later change of ownership and direction.
I cant really follow or understand who or what owns dreamland, but didnt TDC only get one quote for the price of dreamland than on that quote agree to sell it to the company that has now stopped trading ? ….I am so confused !!
IT clearly is not business as usual . Many in the town thought it a bad idea to allow a hedge fund to take control of a local and national asset such as Dreamland in the first place . How daft were we ? That was before Tdc wanted them to get their hands on the listed cinema ,sunshine cafe and other assets in a fire sale . Surely this sale must now be put on hold .Central government need to be called in as our paid officers and Elected officials have proved themselves incapable yet again to exercise sound financial judgement and certainly not to be governed by sound ethical business principles .