Six Flags says there is 'substantial doubt' the chain will survive
Six Flags today told the U.S. Securities and Exchange Commission, in essence, if we can't restructure our debt before we have to make more than $300 million in payments this summer, we're going bankrupt.
Here are the notable quotes from Six Flags' most recent 10-Q statement, filed on the SEC website:
We have had a history of net losses. Our net losses are principally attributable to insufficient revenue to cover our relatively high percentage of fixed costs, including the interest costs on our debt and our depreciation expense. We also have an accumulated stockholders' deficit of $443.8 million at December 31, 2008. Additionally, our Preferred Income Equity Redeemable Shares ("PIERS") are required to be redeemed in August 2009, at which time we are required to redeem all of the PIERS for cash at 100% of the liquidation preference ($287.5 million), plus accrued and unpaid dividends ($31.3 million assuming dividends are accrued and not paid through the mandatory redemption date). Given the current negative conditions in the economy generally and the credit markets in particular, there is substantial uncertainty that we will be able to effect a refinancing of our debt on or prior to maturity or the PIERS prior to their mandatory redemption date on August 15, 2009.
...Accordingly, we have stated in our financial statements included herein that there is substantial doubt about our ability to continue as a going concern unless a successful restructuring occurs.
...We may be compelled to seek an in-court solution in the form of a pre-packaged or pre-arranged filing under Title 11 of the United States Code, 11 U.S.C. §§ 101, et seq., as amended ("Chapter 11") if we are unable to successfully negotiate a timely out-of-court restructuring agreement with the PIERS holders, common stockholders and our creditors.
In English, that means bankruptcy. 'Cause at this point, with all the nation's major banks essentially insolvent, Six Flags has about as much chance of refinancing as you do winning one of those big stuffed animals with a single coin toss on a Six Flags midway.
Scratch that, your chances of landing the four-foot Tweety Bird are better.
I got my Season Pass :(
So it begins...
So, I guess the real question is, will Six Flags become the next HRP?
Again, as we were talking about early this week (regarding Worlds of Fun), the story's the same - profitable individual businesses being brought down by corporate debt amassed during go-go-bubble times as a chain expanded beyond its means.
Yeah, SFGA has gone from one of those parks that used to be known as having terrible service in the 80s and 90s into a thriving, and I am guessing, profitable park. It would be terrible to see it go since its been in its current location for 33 years.
As with many of these cases, I think the worst thing that could happen, from the consumers' point of view, is a long restructuring period. All that will accomplish is the gutting of guest service, upkeep and capital expansion at the parks, leaving even the strong ones in a severely weakened state, as the company tries to cut every cost to make its restructured debt payments.
This is such a bummer, but not unexpected. I have my season pass as well and I'm planning on hitting SF America in Baltimore for the first time in May. May I beat the bankruptcy!!
Damn. That's all I have to say.
And to think...Six Flags actually had revenue and attendance
Bad news for Six Flags, although to tell you the truth, it's not over yet. Fixing this problem isn't about getting the money. It's about getting either A) an extension, or B) a restructuring. There are ways to fix this problem, and I'm sure that Six Flags isn't the first company that's been down this road.
That's too bad. Although Dan Snyder's business practices were going to bring him to this point eventually. But I guess if 2008 was profitable and people are seeing changes then something must be going right. I have only seen the crappy SF parks so I don't have much stake in the game. But I hope they figure something out just for the sake of the Inustry as a whole.
Im in agreement with alot of folks on here, the "core 4" parks(SFoT/SFoG/SFFT/SFMM) should be kept, as they are known regional economic generators for their areas. The other properties (Small Regionals, Foreign, Side Businesses) should be sold off ASAP. If worse comes to worse, I have a feeling
Going by attendance, Great America and Great Adventure are the two most popular Six Flags parks. Magic Mountain is next on that list. So there are your top three Six Flags parks. Add the chain's three original parks in Texas, Georgia and St. Louis, and you have... six parks for Six Flags. Works for me. (Though I can envision an argument to dump St. Louis for New England.)
Six sound like a reasonable number, but I feel bad for the ones that close down.
Well at least we know one company that is not going to go after Busch Entertainment...not that there was ever any idea they would!
I meant to say core six LOL. But yes, I agree totally on a swap for SFSL for either SFNE or SFFT, as both those parks draw a decent amount of people and do well in their respected communities. Im all over that like ACEers at a fried gravy-covered buffet...
My family recently purchased season passes to Six Flags Discovery Kingdom in Vallejo. In a time when everyone is tightening their belt, we were searching for a way to take family vacations on a minimal budget throughout the year.
At the park level, there is some great management within the chain these days, which makes it so sad that the Snyder era was doomed from the beginning due to the debt inherited from the Premier Parks crew. I strongly believe Snyder should have gained control not the way he did, but by using his board influence to force the old management crew into bankruptcy court, where he could have picked up Six Flags' best parks, minus the debt.
ALthough I can appreciate the SFNE fans, I feel Six Flags would be nuts to put SFSL on sale. WOF just went up from Cedar Fair and if they can't find a park, I can see it being shuttered to save money.
They closed tonight on the stock market with .19 a share! Ouch!
I also believe Six Flags should keep their most popular parks. I already believe that the original three are safe (SFOT, SFOG, SFSL). In a nutshell:
I think bankruptcy is the best move for Six Flags. The amount of debt exceeds the value of the parks. I bet that Six Flags has pledged most of the parks to the creditors, so in the event of bankruptcy, the creditors would move in and take over or sell the parks. Most of the parks will be very profitable if other operaters can pick them up at deep discount prices (like they did for HRP). I would not worry about bankrupty because due to the very nature of these parks, they really can't be closed (the land value is small for most of the parks), but they can be very profitable if run properly and the operator has a reasonable debt level.
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