Dreamland Crisis Betting on Failure??

Arrowgrass Master Fund Ltd has lent Sands Heritage £600,000 to help to pay off its debts. It is registered in the Cayman Islands and does not pay UK Taxes. According to a document published in September 2015 Arrowgrass Master Fund is owned by  Arrowgrass Capital Partners LLP which is based in London

If Sands Heritage fails to repay  Arrowgrass it will take  control of the Dreamland Amusement Park’s  100 year lease agreement which was granted by Thanet Council to Sands in 2015. Arrowgrass Master Fund Ltd could then take over the running of Dreamland itself, seek another  operator for the park, or presumably sell the lease on. It can also dispose of all the assets at the amusement park which are owned by Sands Heritage which includes some of the rides.  

According to its website Arrowgrass Capital Partners  specialises in high risk investments including investing in companies facing administration, bankruptcy and liquidation. Here’s the official  warning from its website

Investment Risk

There are significant risks associated with investment in the products outlined in the site. Investment is 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. There will be no secondary or public market.
The value of investments and any income derived from them can go down as well as up and the value of an investor's investment may be subject to sudden and substantial falls. The loss on realisation may be very high and could result in a substantial or complete loss of investment.Most if not all of the protections provided by the United Kingdom regulatory structure will not apply to investments. Investors should be fully aware of the restrictions on transfer of investments.

You can’t get much clearer than this – Arrowgrass, and its associated companies, operate in the high risk/ high return market which is very likely to mean that they are so called “aggressive investors” who aim to extract maximum returns in the shortest time. This is of course perfectly legal and does not suggest any impropriety by Arrowgrass or its related companies. In fact as far as  I have been able to ascertain Arrowrgass and its related companies are well run and successful.  However it does suggest to me that Sands Heritage is  in extremely serious financial  trouble and  that  Arrowgrass might be their lender of  last resort. But there is something else which worries me too.

I have heard from my colleagues Louise Oldfield and Ed Targett that Nick Connington,  who is a director of Sands Heritage, used to work as fund manager for Arrowgrass. I have also found another connection between Sands Heritage and Arrowgrass.

According to Companies House website Mr Nicholas Graham Neill is a director of Arrowgrass Capital Partners LLP. Arrowgrass documentation states that Mr Neil is  Arrowgrass’  Chief Investment Officer and  owns greater than 50% of Arrowgrass UK. Mr Neil  appears to be the same  Nicholas Graham Neill  who was until July 2010 a director of a company called Lifescan Limited and who  is described as being an investment manager. Also a Director of Lifescan Ltd at the same time as Mr Neill was Mr John Peter Anthony Adams who is  currently a director of Sands Heritage Limited along with Mr Nick Connington.

So what we have is a company, Sands Heritage, in a desperate financial  mess is borrowing money from an offshore investment trust with which the directors of Sands Heritage, Nick Connington and John Peter Anthony Adams have had very close links with. Now I’m not saying that there is anything wrong in this arrangement. It could just be a case of business pals helping each other out in hard times. But we need to be absolutely sure about this.

The people of Thanet have invested at least £8 million in Dreamland through their council tax payments to Thanet Council and Kent County Council. Another £10 Million has been invested in Dreamland by the Heritage Lottery Fund and the Government’s  Coastal Community and Sea Change Grant Funds. That’s an astronomic £18million of  public funding  in Dreamland. I would argue that this huge level of public investment gives  the people of Thanet the right to know that the park operator has been acting honestly and properly in its management of Dreamland.

To establish this fact 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.

 Most reasonable people, myself included,  hold the view that it is unethical for business owners to hold investments which will generate a profit for them if their business fails. This I believe is called betting against yourself or  profiting from your own failure which I would imagine is a massive conflict interest.  Not that I am suggesting that this is case;  indeed I think that it is very unlikely,  but I believe that the people of Thanet would be extremely angry if the operator  of the Dreamland Amusement Park was discovered to have made a profit out of a very difficult situation.