The buyer is a company controlled by Chiel Smits, Starneth’s chief executive.
Challenger will receive the cash on the closing of at least two major development projects over the next two years, including the giant observation wheel project in Jakarta, where developer's funding arrangements are “awaiting finalisation”.
From the sum it receives the firm must pay US$1.34mln (€1.25mln) to the original vendors of the business.
Following the deal the company’s main asset will be its two equity units of the company that is developing the New York wheel.
One of those units is currently pledged to the business that originally sold Starneth and will be held until the cash consideration is paid.
Separately, Challenger has brokered a five-year cooperation agreement under which Starneth can provide the design, engineering and project management for observation wheel projects and Challenger can provide potential funding options for the developers of select projects.
Chief executive Mark Gustafson said: "Mindful of the extended delay in commencing work on the Jakarta project, the long timeline required to commence construction on other giant observation wheel projects and having carefully assessed potential development options for the company, we consider it to be most prudent for the short and long-term growth prospects of Challenger to divest our interest in Starneth.
“Importantly, the sale extinguishes all of our regular cash obligations to Starneth whilst still maintaining our strong relationship with them to ensure that we might benefit from the development of future projects.”