A pot of £600,000 to pay debts to those owed money by Dreamland operator Sands Heritage Ltd has been agreed.
A meeting of creditors with Dreamland administrators Duff & Phelps was held in London on August 30 to agree terms of a company voluntary arrangement.
The agreement, approved by 75% of creditors, is for a ‘minimum’ payment of £600,000.
Some £5.7 million is owed to unsecured creditors but around £2.4million of this is owed to company investor Arrowgrass, which will not be paid from the pot. It means that unsecured and unconnected (holding no shares) creditors will get 25p for every £1 owed
The pot has been supplied by a third party – believed to be Arrowgrass – which now owns 98.8% of the company shares and is in the process of buying the remaining 1.1%.
Financial difficulties
Sands Heritage Ltd went into administration in May 2016 – just under a year after the company reopened Dreamland amusement park.
The company suffered financial difficulty at the end of 2015 when it entered a voluntary debt plan after being hit with a net loss of £5 million and owing bills of £2,893,128.
In May 2016 Benjamin Wiles and Paul Williams, Managing Directors of Duff & Phelps, were appointed Joint Administrators of Sands Heritage Ltd, trading as Dreamland.
Last September it emerged that Sands Heritage Ltd owed an estimated £8.34 million to a list of creditors, including many small local businesses, and had a total deficit of some £14 million.
Administrators’ report
A progress report by Duff & Phelps in June this year stated £5.7 million is owed to unsecured creditors.
The report also said there was a trading deficit of £17.7million. This included £8.3 million spent on rides, equipment and the buying of properties.
Duff & Phelps had aimed to market the business and sell the assets by March this year but that administration period has now been extended twice.
All Sands Heritage Ltd directors – Nick Conington, Christopher Rudgard, Robert O’Connor and John Adams – have resigned their posts. New directors are named as Steven Mitchell – currently the interim CEO at Dreamland – and Jennifer Double.
Arrowgrass initially loaned the company £600,000 in July 2016.The amount owed by August for the Arrowgrass loan was £2.3 million due to interest, charges and costs.
In March this year a massive £25million had been added to the investment. The Arrowgrass funding stood at £27.4million by June this year.
The cash was secured by placing legal charges on SHL’s 99 year lease of the Dreamland site, agreed with Thanet District Council (TDC) in 2015, and by placing charges on other, non-TDC, properties leased by SHL.
The properties include land at 43-47 Marine Terrace; land at 45-55 Eaton Road: Cinque Ports pub; Ziggy’s; fish and chip shop at 48 Marine Terrace and land at Dreamland amusement centre.
A lease has also been taken out on the Arlington car park.
Reopening
The Arrowgrass investment made a complete overhaul of Dreamland possible, ready for a reopening in May this year. The event, attended by thousands of people, also included the switch-on of the Dreamland neon lights by artist Tracey Emin.
Since the reopening the park has hosted a number of large festivals, including the Demon Dayz gig which attracted some 15,000 revellers, this weekend’s Undercover Festival and Sunset Sessions with By The Sea festival due to take place later this month.
The agreement
The CVA agreement states: “The arrangement shall not be capable of successful completion until all unsecured, non- preferential creditors claiming in the arrangement have received a dividend from the minimum contribution of £600,000 paid by the 3rd party.” The time period this should be completed by is six months.
Full payment will mean the end of administration proceedings.
A spokesman for Duff & Phelps said: “The administrators are still going to be involved in the short term but the idea is, that with the new management team in place, they can start winding up the administration process.”
The documents are due to be published on Companies House shortly.