The controversial decision by Pembrokeshire County Council to exchange loans for share options in the Bluestone holiday village has taken a new twist.

The Western Telegraph has obtained a creditors letter from Grant Thornton UK, the administrators overseeing the financial changes at Bluestone.

It shows that Grant Thornton was appointed by the Bluestone group and the Bank of Scotland (BOS) in April to carry out an independent business review because the bank had become “concerned about the adequacy of the financing”.

Other issues found included: “The business suffering with a poor trading performance compared to business plan budgets leading into the off-peak season, leading to a projected substantial negative cash flow by early to mid November 2009.”

The performance of the group was monitored until October, when contingency planning was instigated.

What followed is known as a pre-pack administration — a quick turnaround and a new company created — following agreement of the main creditors.

The pre-pack administration, carried out in November, was considered to provide the best option for creditors and to resolve issues arising in the monitoring period.

Pembrokeshire County Council was asked by the Western Telegraph if it was aware of the Bank of Scotland’s concerns before the decision to take shares was made.

The paper also asked if this would have an impact on the security of public money invested in the company.

A spokesman said that as far as the authority is concerned, “the financial restructuring of Bluestone was to facilitate £10million worth of new investment by Finance Wales and Bank of Scotland.”

But county councillor Mike Stoddart said: “Now that this letter has come to light we can see that the original story was a piece of spin designed to convince the people of Pembrokeshire that a good event had happened when in fact a bad event had happened.”

A spokesman for Bluestone said: “Bluestone is the biggest, most ambitious start-up business in Welsh history, and it started trading in the worst economic climate in living memory.

“The fact that it has full bank support, employs over 400 local people, pumps millions into the local economy annually, and is carving a growing reputation as one of the UK’s best short break destinations is testament to the tenacity, persistence and hard work undertaken by the Bluestone team, its partners and its suppliers.

“Bluestone has just enjoyed a very successful new year period; it has some very exciting plans for 2010, and looks forward to consolidating its position as a crucial economic driver for Pembrokeshire.”