Village Roadshow secures $70 million from lenders and Queensland Government to cover costs

[RossL]

Of course no-one is expecting them to repay the loan in three years, it is just the point at which it will get refinanced at a different interest rate.

If that fails, it is secured so the state government would essentially take possession of the business while every other creditor would likely lose their money owed to them.

So really what has happened is the state government has secured the long term future of Dreamworld as if it goes badly they'll be in control of the major decision making, ie who it gets sold to or potentially directly operated.  The government is unlikely to lose money on these deals and even then they could justify it with keeping these businesses operating in the intervening period which the private sector cannot justify in the same way.

[Jdude95]

The government probably also understands that this is a major tourism draw to the state. If the worst did happen and they took control of they park, they would understand its value as a whole instead of Wonderlanding it and trying to pull a firesale to recoup funds. 

[DaptoFunlandGuy]

11 hours ago, RossL said:

If that fails, it is secured so the state government would essentially take possession of the business while every other creditor would likely lose their money owed to them.

What is it secured against though? The land? The assets? The entire company?

The state gov would have a PR disaster if the worker entitlement creditors received nothing because the loan captured the entire value of the park.

 

[red dragin]

Aren't worker entitlements protected under law, before any secured creditors (I think I read something during the Virgin Aus collapse that said that)?

[DaptoFunlandGuy]

before any UNsecured creditors, yes. But a secured liability gives the debtor the right to take possession of the secured asset before any dividends are paid.

[RossL]

3 hours ago, red dragin said:

Aren't worker entitlements protected under law, before any secured creditors (I think I read something during the Virgin Aus collapse that said that)?

There's the federal entitlements guarantee that also pays out workers everything except for superannuation if the company they are employed by gets liquidated.

And I'd also assume that the government would take on all staff liabilities as part of taking on the business.  Workers are unlikely to get burnt in any significant way.

I'd assume that it is basically secured against all assets.