Ardent Leisure Group’s (ASX: AAD) Dreamworld on the Gold Coast was rocked by a tragic event on Tuesday afternoon.

The company confirmed in a market announcement just after 6pm yesterday that there had been four fatalities at the popular theme park, which reportedly happened on the ‘Thunder River Rapids Ride’.

In its statement, Ardent Leisure Group said: “Dreamworld is working as quickly as possible to establish the facts around the incident and is working closely with the police, emergency services and authorities to do this.”

It also confirmed the park will remain closed today as a mark of respect.

Of course, the tragic nature of the incident and the impact it will have on the families and friends of those involved cannot be understated. Theme parks are meant to be a place where families go to laugh and enjoy themselves, not somewhere to be feared.

However, the incident could also prove very damaging for the theme park itself, together with its owner Ardent Leisure Group. The company’s share price collapsed nearly 8% after the incident was reported late yesterday afternoon, and could have further to fall as more details are released.

The Australian Financial Review reported that a coronial investigation has been established. Some reports, including one from news.com.au, suggest that there had been problems on the ride earlier in the day and engineers had been called in. However, in a television interview with the ABC, Gold Coast Inspector Todd Reid said he was not aware of any problems with the ride that day, although he did confirm that would be part of the investigation.

Although Dreamworld has had a relatively clean record since it was first opened 35 years ago, it has had a few other incidents including one earlier this year. According to the Courier Mail, a man almost drowned after a similar conveyor belt malfunction.

Investors are now faced with plenty of uncertainty related to the potential liability of Dreamworld or Ardent Leisure Group itself. While the theme park will obviously be closed on Wednesday, people could also choose to avoid the park in the near future while the incident is still fresh in their memory, thus impacting the group’s earnings results.

Ardent Leisure Group also owns the neighbouring WhiteWater World, as well as other entertainment brands such as AMF, Kingping Bowling and Main Event Entertainment. It completed a sale of its Health Clubs division, comprising Goodlife Health Clubs and Hypoxi, to Quadrant Private Equity yesterday.

Village Roadshow Ltd (ASX: VRL) also owns a number of theme parks on the Gold Coast, being Sea World, Movie World and Wet’n’Wild. It’s possible that visits by families and tourists could also be impacted at these parks following yesterday’s tragic event at Dreamworld.

Foolish takeaway

In November last year mining giant BHP Billiton Limited (ASX: BHP) was also struck with disaster when one of its dams at Samarco in Brazil burst, causing more than a dozen fatalities and having a monumental impact on Brazil’s environment. Its share price suffered greatly following that incident.

As previously mentioned, the liability the company may face is still unclear, while there could be more bad news for its share price as well.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.