Dreamworld operator Ardent Leisure Group (ASX: AAD) announced yesterday that it had been approached by two significant shareholders, Ariadne Australia and Kayaal Pty Ltd, who own a combined 7.9% of Ardent and are requesting seats on the company's board.
To facilitate more transparent discussions with these would-be directors, Ardent deemed it appropriate to update the market on some of its recent confidential initiatives, which include:
- Hiring consultant L.E.K. to review Main Event's business model and strategy
- Investigating the possible rezoning of parts of the Dreamworld site for alternative uses, with a view to unlocking value
- Seeking to appoint 1-2 US-based non-executive directors to the company board, as Ardent becomes increasingly US-centric
As shareholders will know, Ardent recently downgraded its full-year earnings for Dreamworld, with the business expecting an operating loss of up to $4 million. The successful rezoning of Dreamworld could be a 'have your cake and eat it too' moment if the company was able to redevelop and monetise part of the site while still retaining the parks' attraction for tourists.
Elsewhere, the Main Event business has also come under fire with constant centre earnings going backwards in recent times; reportedly due to a 'conscious cannibalisation' strategy by management. With L.E.K. to commence its in-depth evaluation in a few weeks, investors will likely get their next update on strategy at the company's report in August.
Interestingly, at $2.08 apiece, Ardent shares are around 6% below the $2.20 they closed at before the Dreamworld tragedy, theme park earnings downgrade, and Main Event constant-centre sales came to light. Either shares were really cheap at $2.20 before these negative things became known, and thus are still good value, or they're overpriced right now.
As some readers may be aware, I'm quite negative on Ardent and think that the market is pricing too much of the future into the company already. However, there are reasons to be optimistic, and you can read more about those here.
