Theme park woes continue, two years after tragedy
The Australian theme park industry remains under pressure almost two years after the Dreamworld tragedy.
Customers are yet to return and the listed companies, Ardent Leisure and Village Roadshow, are selling down assets.
In the latest move, Village Roadshow has struck a deal to sell its western Sydney Wet‘n’Wild water park to Spain’s Parques Reunidos for at least $40 million.
Commercial Insights: Subscribe to receive the latest news and updates
The sale of the park will hit Village Roadshow with a pre-tax loss of about $25m, which will cut into its fiscal year 2018 results, but analysts said it had poured far more into the facility over the years.
Village Roadshow built the park between 2010 and 2013, sinking an estimated $130 million into the Sydney water park but the company has been dogged by the facility’s underperformance.
Investors say Village Roadshow will need to pour sale proceeds into cutting its hefty debt load. The deal is worth $40 million, plus a variable compensation that will depend on the park’s revenue performance to the end of June 2020.
The deal gives Parques Reunidos, which runs more than 60 entertainment assets and 20 water parks globally, an entry into the Australian market and the vendor said it would be “able to add value and enhance” Wet‘n’Wild Sydney’s performance.
It comes after the company sold the land its Warner Bros Movie World and Wet‘n’Wild Gold Coast theme parks sit on for about $100 million to super fund LGIAsuper in December, in a sale and leaseback deal.
Village Roadshow last October sold its stake in a Singapore movie theatre to partner Orange Sky Golden Harvest Entertainment Holdings for about $165 million.
Dreamworld continues to battle to attract visitor numbers.
But it has been crippled by the fall-off in visitor numbers to Queensland’s theme parks as a result of the accident that claimed four lives at Dreamworld on the Gold Coast in October, 2016.
Dreamworld is owned by Village rival Ardent Leisure, which on Sunday promised a significant change in senior management, starting with Friday’s resignation of theme parks chief executive Craig Davidson after a fortnight of damning evidence at the inquest into the Thunder River Rapids disaster.
Ardent Leisure has put in chief experience officer Nicole Noye as acting theme parks chief executive pending an international search to replace Davidson.
Ardent chairman Gary Weiss says that, like everyone else, he has been “deeply concerned” by what had emerged in the inquiry. He says the company needs to once again earn the trust of its visitors.
Han says Village Roadshow’s Sydney park sale has been struck at a low price but this is in line with its performance.
Morningstar estimates the company’s debt was close to $350 million at the end of last month, putting the company under pressure as underlying earnings had fallen from $136 million to $86 million.
This article originally appeared on www.theaustralian.com.au/property.
