The recent BHS scandal demonstrates how unscrupulous businessmen like Sir Phillip Green and Dominic Chapple can accumulate large personal fortunes by feeding, like vultures, off struggling companies. These so called entrepreneurs reportedly bent the rules of business to breaking point, subverted ethical standards, and ruthlessly exploited staff and investors to feed their insatiable greed for personal wealth. To coin an over-used phrase people like Sir Philip Green are, for many, the unacceptable face of capitalism. And here in Thanet I fear we have something akin to a BHS situation developing at Margate’s iconic Dreamland Amusement Park and here’s why I think so.
In November 2014 a company called Sands Heritage Limited, who’s directors include Mr Nicholas Con-nington and Mr John Adams, was appointed by Thanet Council as the operator of Margate’s Dreamland Amusement Park. There was much controversy surrounding Sand’s application to become Dreamland’s operator. It was a new company seemingly inexperienced in running seaside amusement parks. There were also rumours that Sands allegedly enjoyed certain “advantages” over the other companies applying to become the Dreamland operator. These rumoured “advantages” have, to the best of my knowledge, never been substantiated but, following a number of complaints, Thanet Council took legal advice about the park operator procurement exercise and disallowed much of Sands Heritage’s application documentation during the final stage of the selection process. Like many others, I am curious to know what Edi-vence of alleged wrong doing, the secret legal advice contained – if indeed any at all??
Dreamland opened to the public on 19 June 2015 and the controversy continued. Its key attraction, the scenic railway, was still being restored and not ready for use by customers for several months to come. In October 2015 Sands Heritage threatened to sue Thanet Council for breach of contract and alleged multi-million pound financial losses caused by the council's incompetence in managing the Dreamland project. Clearly there was some substance to this claim and in November 2015 Thanet Council paid Sands £912,000 in compensation. In December 2015, just 6 months after the opening of Dreamland, Sands Heritage announced that it owed a massive £2.9million in unpaid bills, much of this to small local businesses. On 23rd December Sands reached a Company Voluntary Arrangement with its 100 plus creditors, using some of the £912,000 from Thanet Council to make an initial payment towards clearing the debt. By May 2016 it became clear that Sands Heritage was still in serious financial difficulties resulting in the appointment of Duff and Phelps as administrators of Sands Heritage. On August 4th , at a meeting of its creditors, the true extent of Sands indebtedness became clear. According to administrators Duff and Phelps’ report to the meeting, Sands owed a massive £8.34 million to almost 300 creditors many of them small local business who can ill afford even modest losses.
Sands’ only secured creditor is, according to the Duff Phelps’s report, Arrowgrass Master Fund Ltd, an investment company registered in the offshore tax haven of the Cayman Islands which is owed £2,343 million plus any accruing interest, charges and costs. The security on this debt is a charge on Sands’ 99 year leasehold of the Dreamland Amusement park. This means that if Sands Heritage were to default on its repayments to Arrowgrass, go bust, be wound up or sold, which considering the precarious state of its finances are all likely options, then Arrowgrass will end up owning the Dreamland lease to do with as it likes.
Now this where things begin to get interesting, or perhaps questionable, depending upon your point of view. Arrowgrass Master Fund Limited is owned by London based Arrowgrass Capital Partners LLP. According to internet sources “Arrowgrass Capital was founded in 2008 by former Deutsche Bank traders. The fund’s founder CIO is Nick Niell. The other founders are Henry Kenner, James Barty, and Michael Sung Wook Chung”. Arrowgrass appears to be a company which specialises in high risk, high return investments particularly focused on companies struggling to keep their heads above water like Sands Heritage. According to a disclaimer on the Arrowgrass website its investments are “intended for sophisticated investors who can accept the risks associated with such an investment including a substantial or complete loss of their investment and who have no need for immediate liquidity in their investment. Investments will be subject to strict limitations on transferability and withdrawal”.
It surprised many people to learn that prior to opening the Sands Hotel in Margate and setting up Sands Heritage Ltd company director Nicholas Con-nington reportedly worked for Arrowgrass Capital Partners reportedly for a period of 4 years. It has also emerged that Con-nington’s colleague director at Sands Hotel and Sands Heritage, John Adams, was the director of company called Lifescan Limited alongside Arrowgrass founder Nicholas “Nick” Neil.
But the close ties between Con-nington, Adams, and the founder of Arrowgrass don’t end there. In March 2016 Adams and Con-nington set a company called Brede Hotels Ltd. In the statement of capital published on the Companies House website Mr Nicholas Graham Niell is listed as owning 100 shares in Brede Hotels. Brede Hotels Ltd appears to be the sole owner of Nyland Rock Hotel Margate Ltd, which was set up by Adams and Con-nington in May 2016, just before the Nyland Rock Hotel was sold for a reported £1.75 million to Tower Pension Fund Trustees on 1 July 2016. According to Companies House records, the receivers have now been called in to Tower Trustees.
Now I’m not suggesting for a moment any illegality or law breaking. But what does concern me is the ethical background to this saga. In effect the directors of a troubled business (Sands Heritage) have a long standing relationship with one of the directors (Nick Niell) of a company (Arrowgrass) which has lent them a significant amount of money. The 2 sets of directors have also, as recently as March – May 2016, established joint business ventures together (setting up Brede Hotels Ltd/ Nayland Rock Hotel Margate Ltd).
I’m sure that this is no more than a case of business mates innocently helping each other out. But as I have stated in earlier postings there is something important that needs to be publically clarified in order to reassure everyone that the relationship between Sands Heritage and Arrowgrass is ethically kosher. That is for Con-nington and Adams to declare whether or not they, or their relatives, have investments in Arowgrass or its related companies including Arrowgrass Master Fund Limited.
If they do, then many people might argue that Con-nington and Adams through returns on any investment they might have in Arrowgrass, might make a profit from the failure of their own company, Sands Heritage. Bearing in mind the fact that Thanet taxpayers have spent, to date, at least £9 million to purchase, restore and open Dreamland (with more to come) and that at least the same has been spent on the park via Sea Change, Coastal Communities and Heritage Lottery grants. Then taking into account the economic damage caused, particularly to small businesses, by the Sands Heritage failure to pay £8.34 million bills; I think that that there would considerable, widespread and entirely justifiable, anger if it transpires that Nicholas Con-nington and John Adans, through their relationship with / any investments in, Arrowgrass, were to profit from the failure of their company, Dreamland operator, Sands Heritage Ltd.
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On 20th June I called out Con-nington and Adams on this blogsite. I said “Nick Connington and John Peter Anthony Adams need to make a public statement in answer to my simple question – do either of them (or their relatives or friends) have any financial interests (shares, loans or investments ) in Arrowgrass Master Fund Ltd or any of its associated companies? I am sure that Messers Connington and Adams have nothing to hide and will be happy provide a truthful answer my question, which hopefully will be no”. Almost 2 months later they have made no public response to this important ethical demand. Now we have fuller picture of what has been happening at Dreamland its more important than ever before for the people of Thanet to know what is happening. So once again I call out Con-nington and Adams to make a public statement in answer to my simple question – do either of them (or their relatives or friends) have any financial interests (shares, loans or investments ) in Arrowgrass Master Fund Ltd or any of its associated companies. Like millions of people I was sickened and angered by the way in which the collapse of BHS massively enriched its owners at the expense of its staff and investors. I don’t want Dreamland to become another BHS and nor do thousands of Thanet residents. So come on Sands Heritage bosses do the right thing and make that statement.