View Full Version : Six Flags Seeks Help Dodging a Chapter 11

03-13-2009, 12:03 PM
Six Flags Inc., one of the nation's largest amusement-park companies, has hired bankruptcy counsel and financial advisers as it fights to avoid a bankruptcy filing amid a mountain of debt.

The company, which has 120 roller coasters and more than 25 million visitors a year, is trying to negotiate with creditors so it can avoid seeking protection under Chapter 11 of the U.S. Bankruptcy Code. But, according to a securities filing, it "may be compelled to seek an in-court solution in the form of a prepackaged or prearranged filing."

"Our creditors are very supportive, but obviously there are issues we need to address," said Six Flags Chief Financial Officer Jeff Speed in an interview.

"We are trying to accomplish something on a consensual basis," added Mr. Speed, who confirmed the hiring of the advisers. "That is always preferred, but I can't speculate on what the ultimate resolution will be."

A bankruptcy filing would likely wipe out the ownership stake of Washington Redskins owner Daniel Snyder, who took control of Six Flags in a public and contentious proxy fight in late 2005 and then brought in his own management team.

"Stockholders would have been better off hiding their money under a mattress" than investing in the company under the prior management, Mr. Snyder wrote in a letter to Six Flag shareholders in October 2005, during the proxy battle. At the time, Six Flags shares were trading at about $7.25. Thursday, they closed at 19 cents on the New York Stock Exchange.

Six Flags bonds trade at 16 cents on the dollar, and its bank debt is at 70 cents on the dollar, according to Standard & Poor's Leveraged Commentary & Data group.

Despite an uptick in revenue in 2008 and sharply reduced losses, the 48-year-old company is buckling under the weight of its debt and a big cash payment to preferred shareholders that comes due in the summer. Six Flags has 20 amusement parks across North America, from Mexico City to San Antonio to just outside Chicago, Atlanta and San Francisco.

The New York-based company has about $2.4 billion in debt, much of it accumulated years ago to build roller coasters and expand abroad. Looming large is the $288 million cash payment owed to preferred shareholders in August, along with $31 million in unpaid dividends. The company has about $200 million in cash on hand, indicating it doesn't have enough to make the payments.

Six Flags hired Chicago law firm Paul Hastings Janofsky & Walker to prepare for a potential bankruptcy filing. It also hired investment bank Houlihan Lokey Howard & Zukin to negotiate with creditors, including its banks, bondholders and preferred shareholders.

In an interview with The Wall Street Journal last summer, Mr. Snyder said, "We aren't where we want to be, but I think we are heading in the right direction." Mr. Snyder owns 5.4% of the company, or about 5.27 million shares, according to recent government filings.

Another large shareholder is the Bill Gates investment vehicle Cascade Investment, which holds 10.2 million shares.

Mr. Snyder's management team, led by former ESPN executive Mark Shapiro, has cut costs aggressively in recent years and sold off 10 parks to reduce debt. It also instituted a "family-friendly policy" that banned smoking in most areas of the parks and emphasized cleanliness. It also promoted corporate sales. Sales ticked up 5% in 2008 to about $1.02 billion, while losses were cut in half to $112.9 million from $253.1 million.

The company brought in more cash than it spent in 2008 for the first time ever. To cut costs, it laid off about 300 people, reducing its head count to about 2,000. It also got a boost from its new Dark Knight roller coaster, a tie-in with the hit movie.

"Our business is sound," Mr. Speed said, "but we have some back-of-the-house capital structure issues that have to be addressed now."


Beantown Bronco
03-13-2009, 12:09 PM
These parks struggled mightily when the market was booming.....now that it's in the crapper, good luck.

03-13-2009, 12:31 PM
Poor Danny Snyder...

Garcia Bronco
03-13-2009, 12:45 PM
Bye Six Flags

03-13-2009, 01:30 PM
If this company folds, we will be losing an American icon.

03-13-2009, 01:38 PM
Magic Mountain is like my second home, hope no parks are closed as a result of this

03-13-2009, 01:46 PM
I think they already sold / closed some of their parks ... sold i think .
Hopefully Cedar Point will buy in and keep them open like they just did with Kings Island near Cincinnati after Paramount F'ed it up and almost ran it into the ground ...

I think Cedar Fair Entertainment (http://en.wikipedia.org/wiki/Cedar_Fair_Entertainment_Company) should get in on this .

03-13-2009, 04:06 PM
I think they already sold / closed some of their parks ... sold i think .
Hopefully Cedar Point will buy in and keep them open like they just did with Kings Island near Cincinnati after Paramount F'ed it up and almost ran it into the ground ...

I think Cedar Fair Entertainment (http://en.wikipedia.org/wiki/Cedar_Fair_Entertainment_Company) should get in on this .

cedar fair has there own problems, they paid way to much for the paramount parks, as well as buying the old geauga lake. I dont think they will be buying anything, in fact they may be the next one in line for chapter 11, they currently are trying to sell 2 of there own parks as it is, hopefully they dont suffer the same fate as geauga lake.

Smiling Assassin27
03-13-2009, 04:16 PM
Somebody will step in and buy them at a bargain and we'll soon see rides like 'The Leg Crusher', 'The Amputator', and 'Plummet To Your Death'.

03-13-2009, 04:38 PM
Magic Mountian in SoCal has to be a money maker, that place is packed 6 months out of the year, and has some of the best coasters in the world.

03-14-2009, 04:32 PM

heres the info on cedar fair i was talkin about