New chairman will have to soothe Nomura's concerns

The future of the Millennium Dome hinges on the ability of its new executive chairman, David James, to explain to its extremely worried buyer why the attraction suddenly needs an extra £47m and has far fewer visitors.

The future of the Millennium Dome hinges on the ability of its new executive chairman, David James, to explain to its extremely worried buyer why the attraction suddenly needs an extra £47m and has far fewer visitors.

Nomura International, the Japanese bank that is now at a crucial stage in its negotiations to buy the Dome for £105m, is getting nervous. Its faith in the financial viability of its own plans to build an £800m entertainments complex on the site has been shaken.

Critical questions will also be asked by the National Audit Office, the public spending watchdog. Sir John Bourne, the head of the office, has now expanded his inquiry into the Dome's finances begun in May, and is expected to call Mr James to give evidence later this month. The date for publishing the office's report has now been pushed back, until late October or early November. Then the powerful Public Accounts Committee at the Commons will launch its own investigation, starting with a hearing on 20 November.

According to sources close to Dome Europe, the Nomura subsidiary buying the 63-acre site knew last month that the current operator, the New Millennium Experience Company (NMEC), had called in PricewaterhouseCoopers to check its accounts and visitor figures. Until Tuesday, however, it did not realise precisely how bad they were.

Mr James, the corporate troubleshooter brought in on the advice of the accountant's investigators - who charged £293,000 for their report - revealed on Tuesday night that the Dome needed an extra £49m to stay solvent. He also revised, for the third time, its visitor projections - down to 4.5 million paying visitors.

These bald figures shocked Dome Europe. "They came as more than a surprise to us," said one source. They suggested that its own visitorprojections for its "urban entertainment resort" were too high. Based on the NMEC's last target of 7 million in May, it believed it could attract 3.5 million visitors next year, rising beyond 4 million by 2003.

But Dome Europe has still to be properly briefed by Mr James. It is still relying on newspaper reports for its information. "The important thing for us is that David James can persuade us to go ahead as before. But the fact is, based on the information we've had from the media, there seems to be a radical change in the nature of the business since July. The question is whether our plans still work," the source said.

Nomura insists its public doubts are not an attempt to whittle down the £105m asking price. It fears its debts in building and running the attraction at a loss for its first two to three years will be too much to sustain if visitor figures slump too low. It fears public confidence has now been too heavily damaged by the Dome's problems.

Mr James, now the NMEC's accounting officer, attempted yesterday to clear up the confusion over the operator's messy finances by giving a breakdown of that extra £47m the Millennium Commission gave it on Tuesday. Roughly £28m is reserved for closing down the Dome around 1 January 2001. It includes £12m to meet outstanding construction costs and for paying bills for services such as gas and electricity. Also included are further consultancy costs of £2.5m for a team of expert accountants and lawyers he has brought in to disentangle the 2,800 separate contracts the operator has to honour. About £2m will go on environmental clean-up and £5m has been reserved for "unforeseen contingencies".

A further £12m is required for unpaid long-term creditors whose bills were left to be settled when the Dome closed. Surprisingly, only a small proportion of that sum, only £7m of that £47m, is to meet the shortfall of visitor numbers.

The main problem, Mr James claimed, was the NMEC had not understood how heavily in debt it was. Itshould actually have asked for £90m, not the £43m it received, he said.

Nomura, he said yesterday, would be reassured. "They're going to make a killing on this place and I envy their position. They're going to have it easy compared to what we have had," he said.