Bluestone: Pembrokeshire council 'lost' £1.8m, councillor says

The £110m resort, which opened in 2008, was partially funded by loans secured from Pembrokeshire council

A £1.9m holiday resort investment will take 340 years to make back, a council says.

Pembrokeshire council loaned the funds to Bluestone resort, near Narberth.

But Councillor Alec Cormack, member for corporate finance, revealed the loans were later converted to shares.

He said this "lost" the council £1.8m and voided a guarantee that the public, not just guests, could access the Blue Lagoon waterpark - the "key" reason the authority parted with the money.

The decision was made in a behind-closed-doors meeting more than a decade ago, Mr Cormack said.

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The revelation came after Councillor Alan Dennison asked Mr Cormack to share what the return per year was on the council's investment over the past five years, according to the Local Democracy Reporting Service.

Mr Cormack said the council gave two loans - to a total approaching £1.9m - to the popular holiday resort, which opened in 2008.

The loans had a legal charge on land attached to them, which gave the authority some security as a lender.

Then, in 2009, Bluestone sought additional investment and invited the council to exchange the loans for shares, but with the loss of this legal charge.

The council declined that offer, but agreed that it would be considered at the next cabinet meeting, Mr Cormack said.

By the time the cabinet met, Bluestone had successfully refinanced, with about £10m of extra investment.

It was then that behind-closed-door decisions were made, removing the loans and the guarantees, members heard.

Mr Cormack said the 2009 cabinet report was confidential, so he could not say what was in it, but said he could tell members "what was not in it," adding that there was no clear justification for taking up the shares or for giving up the legal charge.

He added that the documents did not outline the pros and cons, or include an evaluation of a fair share price.

Members heard the value of the shares amounted to under £70,000, and had paid out £19,000 in dividends over the past five years, with the highest dividend in a single year amounting to £5,250 in 2019-20.

'Very weak position to be in'

Mr Cormack said: "The council's lost £1.8m of the £1.9m investment - roughly 95 per cent - and the public's lost the guaranteed right to use the Bluestone pool.

"At this rate, if we took that maximum dividend amount of £5,250, the council would get its money back in roughly 340 years."

He added that previous conversations had taken place between the council's director of resources and Bluestone's finance director, with not much interest shown in buying back the shares.

"Being a minority shareholder in a private company is a very weak position to be in, any attempt to sell shares would lead to a minority share discount," he said.

A minority share discount means shares that have little controlling power of a company due to the small percentage may be worth even less than their face value.