Village Roadshow Limited’s [ASX:VRL] share price fell slightly after announcing the sale of its Sydney-based Wet ‘n’ Wild this morning.
The entertainment company’s shares are currently trading at $2.30 — 45% below their 52-week high of $4.21.
Village have been on a sidewards trend since the beginning of May, after announcing a downgrade in expected earnings in mid-April and shedding over 30% of its share value.
Village Roadshow sells Sydney Wet ‘n’ Wild for $40 million
Village revealed in an update this morning that it signed an agreement to sell its Sydney-based water park for $40 million to Parques Reunidos, a Spanish leisure attraction operator.
In addition to the $40 million, Village will receive further payment. The final price is dependent on the performance of the park over the next two years, until 30 June 2020. Village is expecting the sale to result in a pre-tax loss of $25 million.
The transaction is planned to occur in the first quarter of 2019, with the proceeds from the sale to be applied to Village’s debt levels.
Parques Reunidos has a portfolio of over 60 entertainment assets globally, including 20 water parks. The acquisition of Wet ‘n’ Wild is the Spanish company’s entry into the Australian market.
What’s next for Village Roadshow?
The sale of the Sydney-based Water Park comes at a time when the theme park sector is back in the spotlight, with the current investigation into the Thunder River Rapids tragedy at Dreamworld.
While, earlier this year, Village was confident that they would recover in the second half of 2018, the company announced in March that full-year results for its theme park division would fall below previous year results.
It’s no mystery why the tragedy at Dreamworld has affected theme park attendance, but as for how long it will take Village to fully recover is unknown.
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