Six Flag seeks Chapter 11 protection but parks will stay open

June 13, 2009

(ChattahBox) — New York-based Six Flags has filed for bankruptcy early Saturday after failing to reach an agreement with lenders to reorganize its debt. The world’s largest regional theme park company with 20 parks across the United States, Mexico and Canada, has sought bankruptcy protection 3 1/2 years after Washington Redskins owner Daniel Snyder become chairman and hired new managers in an attempt to return it to profitability. Another large stakeholder is Bill Gates’ investment firm Cascade Investment.

The Chapter 11 petition filed in U.S. Bankruptcy Court in Wilmington, Delaware, listed assets of $3 billion and debt of $2.4 billion as of Dec. 31. Thirty-six affiliates also sought protection. In a statement, Six Flags said it was seeking court approval for a restructuring plan it had already negotiated, which has the unanimous approval of its lenders. That proposal would eliminate $1.8 billion in debt and slice off the $300 million in preferred stock payments.

Mark Shapiro, president and CEO, said in a letter to employees posted on the company Web site in regards to the bankruptcy filing:

Unfortunately, however, as you know, we inherited an unsustainable $2.4 billion debt load from the previous management team.  To put it into context, even if you have a record year and make approximately $275 million as we did last year, when you have to pay out approximately $175 million in interest expense on your debt and $100MM in park improvements to maintain and keep up with the business, that’s a balancing act you just can’t risk year in and year out.  Furthermore, we have over $400 million of debt coming due within the next 12 months that cannot be refinanced in these financial markets.

Shapiro also said the Six Flags brand remained solid and that employees and vendors would continue to be paid.

Six Flags shares have fallen 86 percent in the past year. Investors are skiddish about the company’s ability to refinance preferred income equity redeemable shares, or PIERS, before their August 15th, redemption date.


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One Response to “Six Flag seeks Chapter 11 protection but parks will stay open”

  1. Homes Mortgage Refinance Guide on June 21st, 2009 2:27 am

    […] Six Flag seeks Chapter 11 protection but parks will stay open … […]

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