Flags, like many companies during these tough economic times, is likely
to come up short on cash.
If you have been reading any newspapers or websites out there, you would think that Six Flags is most likely going to go bankrupt. That is not the case.
RestructuringSix Flags is currently in talks with lenders and bond holders about an out of court restructuring. This process could potentially eliminate the need for any sort of Chapter 11 restructuring bankruptcy.
In a recent article published by the
New York Times, they have Six Flags CEO Mark Shapiro quoted saying, “We’re in active dialogue with our lenders to restructure our enormous debt load. The debt load we inherited is stifling our growth.”
David Preiser, senior managing director of Houlihan Lokey, a consultant Six Flags has hired for this process stated, “We have been in continuing discussions with many of the company’s larger bondholders to discuss various restructuring alternatives and elicit their views and support. All of the large bondholders we have spoken with have been supportive of the concept of an out-of-court solution.”
The SolutionSix Flags is offering lenders and bond holders approximately 85 percent equity in the company in order to eliminate some $900 million in debt. In essence, instead of Six Flags owing lenders and bondholders money, those lenders and bond holders would actually own a portion of Six Flags.
Reducing the debt by $900 million would make a significant dent in what the company owes. In fact, Six Flags’ approximately $2 billion in debt would nearly be halved.
Despite the efforts being put forth by Six Flags, there are some issues to be worked out with one particular fund manager who refuses to respond to Six Flags' effort to restructure. We’ll have more information on this at the end of the week.
At the Local LevelAt the local level, Six Flags park officials are optimistic about the restructuring process.
Nancy Chan, the Public Relations Manager at Six Flags Discovery Kingdom told us, “The good news is that the restructuring, while serious business, is having no effect on our daily operations here at Six Flags Discovery Kingdom. As you know, companies, like ours all over the United States are restructuring their debt and keeping their doors open. In fact, we’re actually in better shape than many other companies that continue to operate through a similar process. Last year, our revenue went up five percent to $1 billion and our operating income grew to $144 million.”
So what does all this mean for Six Flags’ parks this summer?
Ms. Chan went on to say, “We have more than $210 million in cash for national operations, we’re hiring full staff at all of our parks and we’re planning some new and exciting attractions including Odin's Temple of the Tiger and our summer concert series, so our guests can expect to have great experiences again at Six Flags Discovery Kingdom in 2009. Plus, we have kept our ‘every one pays kids prices’ program so it’s a great value, especially for season pass holders. As our CEO Mark Shapiro has said, the restructuring is a “back-of-the-house” issue that won’t affect our ongoing service to guests.”
In addition to ‘every one pays kids price’ all parks are offering the lowest season pass prices in years. Six Flags Discovery Kingdom 2009 season passes are currently on sale for just $49.99 for a limited time.
In SummaryIn summary, Six Flags parks across the country will continue to operate as usual. There are no plans to cut back as they have a solid plan in place. Guests are already reporting
spectacular visits to the parks this season.
If you are not aware, the Six Flags turnaround, lead by Six Flags CEO Mark Shapiro, has had more success than anyone could have imagined. While they are in this financial situation, the parks are better than ever before and they have a plan to get their balance sheet in order.
Last year, Six Flags had the highest Guest Satisfaction Ratings in recent history. Revenues were up, attendance was up, and guests were having a great time.
So if you haven’t visited a Six Flags park in a while, now is the time. Parks across the country have been making a turnaround as they offer Friendly, Clean, Fast, Safe service at an affordable price. The paint is fresh, the flowers are watered, and the faces are smiling at Six Flags.
As Mark Shapiro said, “No matter the outcome of our restructuring conversations, this is a back-of-house issue and the guest will not see a lick of difference in our award-winning product this summer.”
If you have any questions, please feel free to
Contact Us. We will be sure to try and get your questions answered!
