Risk & Economy » Audit » Write-offs prompt investigations at AIM-listed Clear Leisure

Write-offs prompt investigations at AIM-listed Clear Leisure

Directors, internal audit committee members and advisers under spotlight

AN INVESTIGATION into potential negligence by directors, members of internal audit committees and advisers who provided valuations prior to the investments has been launched by AIM-listed hotel and theme park group Clear Leisure.

The company’s board is embarking on the action in order to establish “whether any negligence or wrongdoings were involved both in the management of the companies and the due diligence of the investments”, a statement to the market reads.

In a separate statement to market, the company’s board stated the investigation does not involve any current or former directors.

In July, the company announced the resignation of chairman and CEO Alfredo Villa, and independent director Francesco Emiliani. Francesco Gardin was appointed chairman and CEO, while Reg Eccles came in as non-executive director. In August, Nilesh Jagatia resigned as CFO.

An initial review of the company’s investment in its proposed Mediapolis theme park in northern Italy has led the board to write down the book value of the investment, even though the assessment is still ongoing.

In November 2013, the company received an offer for Mediapolis of around €20m (£14.8m) including the debt, subject to the fulfilment of certain conditions. The offer, though, was short of book value of Mediapolis in December 2014 of €35m.

While the company will continue to pursue the claim for €39.65m damages against the Piedmont Region for failing to honour a commitment to approve the construction of the Mediapolis theme park, the board has considered it “prudent” to write down the book value by €15m, to the equivalent amount offered in November 2013. It added it is possible that further write-downs may be required although approval to construct could result in an “upward revision” of the value.

It added it has decided to maintain the book value of its Ondaland water park in northern Italy as per its December 2014 accounts, pending the outcome of legal proceedings lodged with courts in Turin over the formal assignment of some of the titles and rights to the investment.

The board has also assessed the valuation of the holding company of its SoSushi company. While not ruling out that “some value could be extracted” from the brand, subject to entering into an agreement with a catering industry partner, the Clear Leisure has elected to write off its €100,000 investment in its entirety.

The company has entered into negotiations with its key creditors and debt providers to extend repayment dates. Based on negotiations to date, the board said it is “reasonably confident” that agreements on the extensions can be agreed.

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