Straco could snap up Singapore Flyer today

[SINGAPORE] The Singapore Flyer might have found a new owner, a year after financial troubles forced the iconic attraction to be put up for sale.

Mainboard-listed tourism operator Straco Corporation could sign a deal to buy the Ferris wheel as early as Thursday, The Business Times understands.

Straco called for a trading halt of its shares at 5.31pm on Wednesday, "pending the release of an announcement".

Asked to confirm the imminent sale, a spokeswoman for the Singapore Tourism Board (STB), which owns the land the Flyer is on, would only say that "STB does not comment on rumours".

Anticipation over the deal has been whirling for months, pushing Straco's shares up 84 per cent in the year to date.

Straco is a profitable, cash-rich company currently valued close to S$700 million. It had S$100 million of cash and no debt as of end-June. It reported net profit of S$13.7 million for the first six months of the year on S$34.3 million of revenues.

The company, listed on the Singapore Exchange since 2004, now runs two aquariums and a mountain cable car service in China.

CIMB Research initiated coverage on Straco in early February, noting that it was "looking at the potential acquisition of a distressed tourism asset in Asia with a project size of over S$100 million".

The acquisition would "provide further earnings momentum and reduce concentration risk in China", the broker said.

British attractions operator Merlin Entertainments Group, which owns the London Eye, was also in the running to buy the Flyer.

But it reportedly dropped out of the running in May after 10 months of discussions, leaving Straco the frontrunner.

Singapore Flyer Pte Ltd, the company behind the attraction, was placed under receivership in May 2013 after it failed to meet its financial obligations to a bank, its main lender.

The S$240 million, 165m-high observation wheel, dubbed the world's highest, began offering private rides in February 2008, ahead of its official opening to the public in April to much fanfare.

Companies held Chinese New Year lo hei events in its capsules; one lover popped the question inside one of them on Valentine's Day.

But trouble soon struck. That December, 173 passengers were trapped in mid-air for six hours after a control-room fire knocked out the wheel's operating systems.

Subsequent rider numbers were below targets. In 2009, the Flyer's investors tried to oust board members.

And tenants in the three-storey commercial complex next to it struggled with poor business.

Experts said a major problem was a lack of local visitors. Singaporeans found the attraction too expensive and boring beyond a single visit.

Adults aged 13 and above are charged S$33 for a half-hour ride, and children aged three to 12, S$21.

The Flyer attracted more than a million visitors in 2012, 40 per cent of them locals.

Financially, the Flyer was undercapitalised when it was built; interest payments by the owners became too onerous, Merlin's strategy director David Bridgford told The Business Times in a previous interview.

Its location right beside Marina Bay Sands and its 57-storey high SkyPark also meant it faced strong competition for people looking for paranomic views.

Others said the Flyer had potential as an integrated package, as long as it had a good tenant mix.

Renowned nightclub Zouk, whose lease at Jiak Kim Street ends next year, has publicly expressed interest to move to the Flyer.

Straco closed unchanged on Wednesday at 82 cents.