Cedar Fair sale in works, for $700m - plus $1.6b in debt
The Wall Street Journal and Sandusky Register are reporting the potential sale of Cedar Fair to Apollo Management LP for $700 million.
The sale would also have Apollo Management take responsibility for the $1.6 billion in debt Cedar Fair current holds. The owner of Cedar Point, Kings Island, Knott's Berry Farm and other regional amusement parks, Cedar Fair has increasingly struggled to management its debt load over the past year. An official announcement is expected within the next couple of days.
So far, this is the only public article on the net is at sanduskyregister.com.
Update from Robert: Deal's done. Add the cash and the debt and you get about $2.3 billion.
Does that number sound familiar? It should. That's the amount that Blackstone paid InBev to obtain the Busch Entertainment Corp. theme parks, now rebranded as SeaWorld Parks & Entertainment. (InBev's got an option on an additional $400 million in SeaWorld revenue, so the final price could go as high as $2.7 billion.)
Given that the latest TEA/ERA report has the former BEC parks attracting 23 million in 2008 attendance, and Cedar Fair doing 22.7 million, it wouldn't be surprising that the two chains would fetch very similar prices. I wonder if Apollo didn't look at the BEC sale price, subtract the Cedar Fair debt and say, "hmm, $700 million sounds about right." (FWIW, I think that SeaWorld Parks should be worth more than Cedar Fair, given the value of the company's stronger brand names and better park locations.)
It's false, according to Dick Kinzel's twitter:
Um, anonymous poster, you know that Twitter account is fake, right?
The Paramount acquisition was a good one, but it stretched them thin. Add to that the economy going in the crapper two years after the purchase and you find yourself in a bit of a financial pickle. Cedar Fair has maintained better standards in the park than Six Flags did under financial strain, and revenues haven't vastly declined, but bank failures and reduced lines of credit due to the economy, decrease in property values, increasing costs...all of them take a silent toll on big companies that the general public just doesn't see or understand. Those factors have been magnified several times over by one of the worst economic times in history.
This is a done deal at 11.50 per unit. Panic move by Cedar Fair management. Yes, times are tough and they have a lot of debt, but cutting off the dividend would have had them paying down $100MM a year in bank debt. FUN management has never been very adept in the financial markets (they remain very close with Key Bank that has little Wall Street knowledge) and it shows here. Note, the company needs a 2/3 vote to make this pass and the investor base as turned over a lot since the likely dividend suspension was announced in early October. It's not a done deal and this unitholder will be voting NO!
Can somebody buy Six Flags and fix that?
Bondholders have been fighting over Six Flags for weeks, actually.
Is there anywhere online with Cedar Fair's annual financial results? I'm going to take a guess that they are considerable worse than BEC's yet the business has fetched a similar price if you take into account the debt.
I don't have all of the financial numbers to look at, or the view down the road like management does, so I can't sit here and say for sure that they don't need to sell. When I dig into what data I do have and take a good look at the company, it's markets, and the state of the industry, it does indeed look a little early to be doing this. The worst of the recession appears to be over and people are starting to spend money again, and the company made it through. They stopped paying the dividends to shareholders, which in theory would allow them to attack debt more aggressively. Their attendance and revenue was respectable considering the economy, and they are primed to grab more market share in the mid atlantic with new high profile coasters going in at Kings Dominion and Carowinds.
I am no expert - at anything, really - but it seems like this deal is a good one for Cedar Fair. Any deal that allows you to get out from under a mountain of debt and privatize your company in the same fell swoop should be considered a win-win.
Take a close look at the numbers though -- they are actually planning to INCREASE the debt of this company. S&P just put the company's debt on negative watch. This is a very odd deal.
I love the thought of Kinzel having a Twitter account.
Cedar Fair is probably the best company out there. I don't think it should be bought. I think they should get rid of Worlds of Fun or at least move their rides to other parks. Running that park wastes there money because not very many people live in the Kansas area.
To the poster above me, Worlds of Fun is NOT located in Kansas it's located in Missouri. And alot of people vist Worlds of Fun because we dont got much choice, its either Adventure Land in Iowa or go down south to Silver Dollar City, which I recommend going to.
Yep, that course of action would solve all Cedar Fair's problems: getting rid of that sieve of capital expenditures that is Worlds of Fun. Genius.
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