Dynamic Attractions, the engineering company which built many of Disney’s most beloved rides, including Test Track and Soarin’, is set to be sold for $2 million to Hong Kong-based financial services firm Promising Expert Limited (PEL).
It comes just days after construction industry giant PCL bought Orlando-based Nassal Cos., which is famous for its work fabricating theme park environments.
Dynamic is a giant of the theme park industry but it began life very differently. Founded in Vancouver in 1926 it initially specialized in building large-scale telescopes before changing tracks when several of its engineers switched to work in the theme park industry. Both fields require precision engineering and Dynamic soon made a name for itself in 2005 by building the track for Disneyland’s renowned roller coaster Space Mountain.
In total, Dynamic has delivered more than $700 million of ride contracts, not just for Disney but also its rivals including Universal Studios. “Dynamic Attractions makes a ton of high tech rides, even some you don’t realize are theirs,” says Robb Alvey, founder of Theme Park Review, the world’s leading theme park and roller coaster review site.
Dynamic even built the ride system behind Universal’s acclaimed Harry Potter and the Forbidden Journey ride which features seats attached to a robot arm on a roller coaster track to make guests feel like they are riding on a broomstick alongside the boy wizard.
Dynamic is still collaborating with Universal to this day and in February the doors swung open to its latest creation, Mario Kart Koopa’s Challenge at the new Super Nintendo World in Universal Studios Hollywood. However, Dynamic had even grander ambitions than that. It had a vision of creating the world’s most advanced and immersive roller coaster and the company bet the farm on it.
Called the SFX Coaster, it was first unveiled in a teaser video in 2014 and promised to combine a number of new and unique effects. They include a sideways drop, a vertical drop and a gyro table which can tilt and spin the ride car 360 degrees. World renowned theme park industry expert Robert Niles described it as “one of the world’s most anticipated coasters” and developing it took the equivalent of 500 person years. This took its toll on Dynamic.
The uniqueness of the ride system led to Dynamic signing contracts to build SFX Coasters in a number of theme parks. They included Mission Ferrari at Ferrari World Abu Dhabi and two attractions at the Genting SkyWorlds park in Malaysia. However, Dynamic under-estimated the complexity of developing the ride system and spent significantly more than the sums the theme park operators paid it in advance which are known in the industry as lump sum payments.
In order to fund the development of the rides, Dynamic got a number of loans with one of the biggest coming from PEL. In August 2022 it lent Dynamic $16 million secured on its assets and followed it up with a further $1 million unsecured bridge loan earlier this year. Paying back this debt has been anything but a walk in the park.
Dynamic’s filings reveal that the development of the three SFX Coasters led to “significant cost overruns that exceeded USD$21,000,000.” The filings add that “these cost overruns on the Coaster Projects significantly impaired the cash flow available to the Dynamic Group.”
By the end of last year Dynamic had burned up $94.5 million of liabilities in its pursuit of the perfect coaster. A source close to the situation explains that “the issue relates to the time and money it took to accomplish this achievement, that exceeded the lump sum contract amounts on Mission Ferrari and two other Special Effects Coasters. Combined, Dynamic spent 500 person years of engineering on this new class of coaster, largely out of its own pocket.”
As I reported, this drove Dynamic into insolvency and on March 9 it formally announced its intention to enter into a Companies’ Creditors Arrangement Act which is essentially Canada’s equivalent of Chapter 11. Ironically, this came just two months after Mission Ferrari finally opened to the public. Dynamic’s woes were first reported on March 20 by multi-park news specialists Screamscape and the situation rapidly accelerated after that.
Just a few weeks later, the Canadian court approved a Sales and Investment Solicitation Process (SISP) which formally put the Dynamic group on the market. The sale process was handled by FTI Consulting
That yielded four bids – one comprising credit and three cash offers for a single division of Dynamic’s operations. Two were for High Express Holdings (US) Inc, a wholly-owned subsidiary of Dynamic which holds its 50% stake in a Smoky Mountain Flyers LLC, a joint venture which operates the SkyFly: Soar America flying theater ride in Pigeon Forge, Tennessee. The other cash offer was for Dynamic’s shares and assets including the manufacturing equipment in its Vancouver production facility.
In the end, the highest-value offer was the credit bid which came from PEL. It made an offer for the majority of Dynamic’s operations except for the manufacturing equipment located in the company’s Vancouver production facility. FTI says that PEL’s “proposed purchase price is both $2 million and 25% higher than any other Bids.” FTI adds that in view of PEL being the highest bidder, it has advised Dynamic that it intends to terminate the SISP and bring the sales process to a close. Dynamic has begun discussing the details of the sale and purchase agreement and company filings state that it intends “to apply to this Honorable Court for an order approving the PEL Transaction once transaction documents have been completed and executed.”
Although Dynamic had $31.9 million of assets, this was dwarfed by its liabilities which is why its sale price was so low. As PEL was Dynamic’s senior secured creditor it was the most logical bidder and the filings reveal that its offer includes “the forgiveness and assumption of a significant portion” of the secured debt. It isn’t clear how much the other creditors will receive but there is no doubt that Dynamic will emerge in a far stronger financial position simply because the secured debt has been slashed.
The filings add that PEL’s offer was also preferred as it is for the majority of Dynamic’s business units and the majority of its 17 employees will be retained. It appears that Dynamic will live on as the filings state that the offer “may preserve the continuation of certain going concern aspects” of its business. However it looks like it will have a very different focus to before as the manufacturing equipment has not been acquired.
In fact, the filings state that Dynamic has agreed to sell inventory and assets to Infinity Asset Solutions, a company which specializes in industrial machine tool auctions. Infinity is due to hold an auction at the Vancouver production facility by July 15 and will receive all of the proceeds. It doesn’t stop there.
Amongst the gems in Dynamic’s production facility is “a demonstration track for the Harry Potter Forbidden Journey Ride that was fabricated for Universal.” According to the filings, Dynamic has “received a request from Universal to decommission and disassemble the track and pack/crate it for shipment to Universal” in return for $149,750.
It is unclear what lies in store for the two SFX Coasters that remain under construction at SkyWorlds. One is based on the Sons of Anarchy streaming series about a father who balances parenting with his involvement in a motorcycle gang. By March the coaster still required a further $1.5 million of work whilst the other one, which is themed to the Aliens vs Predators action movie, needed $16 million of investment. The filings revealed that “because of the complexity of the ride system, and the design changes that would be required to make it operational, there is a risk that the client could cancel the contract and demand that the ride components installed to date be removed from the facility.”
It looks like Dynamic’s focus will now be on joint ventures as its chief executive Guy Nelson said in February that “our company has made it a policy to only undertake new product development when we have a firm collaboration in place with a customer…We have had a very positive experience with one of the major park owners where we collaborated and risk shared on the design and prototyping and then we went commercial after we both agreed to proceed to bring the prototype into commercial production.
“We are in the process of negotiating a strategic alliance that would capitalize on Dynamic’s hard fought learning curve for SFX coasters by mitigating many of the challenges related to market affordability.” So although Dynamic has changed hands, it seems to be a long way from taking its last ride.