Readers' Opinions

From 71.185.123.136 on December 16, 2009 at 7:45 PM
It's false, according to Dick Kinzel's twitter:

http://twitter.com/DickKinzel

From Robert Niles on December 16, 2009 at 7:47 PM
And the $1.2 billion deal to buy Paramount Parks finally sinks Cedar Fair.

Let this be a lesson, future theme park managers (heck, it's a lesson for future managers in any business). Debt-financed acquisitions during boom times of assets worth almost as much or even more than you are will sink your business when the economy, inevitably, turns.

See: Premier Parks (Six Flags), and now, Cedar Fair.

From Robert Niles on December 16, 2009 at 8:11 PM
Um, anonymous poster, you know that Twitter account is fake, right?
From Derek Potter on December 16, 2009 at 8:53 PM
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.

They have been trying to make moves to pay down debt (ex. selling land across the way from Canada's Wonderland), but they also haven't been shy about building high profile roller coasters the past couple of years. Understandable, because you want to stay fresh and keep the turnstiles turning, but it's still a lot of money. There's also the battle between Cedar Fair and the San Francisco 49ers over the new stadium. The new stadium plans infringe upon the parking lot of Great America, and it's now about to go to court. Add to that the upcoming debt, the Son of Beast debacle, the fight over admission tax increase at Kings Island, and almost certain revenue and attendance issues with a couple of their smaller parks, and you have a heavy burden. I don't think that Cedar Fair is broke like Six Flags, but I think that they understand the lessons of Six Flags and they know they need some financial help now. Simply put, Cedar Fair is the picture of a financially stable company that stumbled upon one of the worst times in history to go into big time debt.

Regardless of the troubles, it's still a very profitable (almost a billion in revenue) and very popular company that is very capable of righting the ship. I hope that the new owners can see that, and I hope that they let Cedar Fair heads do their thing. An amusement park should be in the hands of entertainers and showmen, and the idea of corporate businessmen controlling the interest in an amusement/theme park company makes me apprehensive...especially when I'm surrounded by their parks.

From 99.21.210.80 on December 16, 2009 at 9:21 PM
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!
From Anthony Murphy on December 16, 2009 at 11:11 PM
Can somebody buy Six Flags and fix that?
From Robert Niles on December 17, 2009 at 12:17 AM
Bondholders have been fighting over Six Flags for weeks, actually.
From Michael Owen on December 17, 2009 at 3:46 AM
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.
From Derek Potter on December 17, 2009 at 9:07 AM
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.

That being said, if there is trouble coming that we don't see, it's not easy to find a buyer for such a large company in these times. They may feel that they are taking a huge gamble by not selling when there is a buyer. There is a provision that allows the company to solicit bids for the next 40 days, which might bring someone else to the table. That and as the above post said, it has to have 2/3 approval. The price Apollo is offering per unit is almost 50% over the closing price prior to the announcement. Of course that doesn't help the investors who have been around a long time and have seen the stock go from around $30 to under $10. It may however net a nice payday for the big shareholders...for example, Cedar Fair upper management. It's not easy for them to ignore that when making the decision. This is a company that will assume their debt, give Cedar Fair deeper pockets, and the board and upper management will get a payday for their stock and presumably get to keep their jobs.

The sale isn't necessarily a bad thing, as long as the owner properly funds the company and leaves the park business up to park people. That is the million dollar question with this whole thing. I do think that maybe corporate is throwing in the towel a bit prematurely.

From Robert Niles on December 17, 2009 at 9:31 AM
Here is Cedar Fair's most recent 10-Q (quarterly report).

And here are the latest earnings from Anheuser-Busch InBev (with the BEC data).

From James Rao on December 17, 2009 at 10:29 AM
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.

If this new mgmt company allows Cedar Fair to continue operations, and they in turn apply all the now freed up revenues toward park infrastructure and new additions, I can see improvements across the board. Who knows, we may even see some themed, narrative attractions in the future, especially if the only thing that was holding Cedar Fair back from stretching their imaginative wings was extra capital!

I am sure the major expansion for Cedar Fair is going to continue at the hotspots like King's Dominon and Knotts, where populations are huge, but what this change means to small market parks like Worlds of Fun is anyone's guess. We'll just have to wait and see.

Still, getting out of debt is always a good thing!

From BOB BOYER on December 17, 2009 at 10:54 AM
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.
From E Ticket on December 17, 2009 at 5:37 PM
I love the thought of Kinzel having a Twitter account.

The man scoffed at *email*. No joke.... when I worked for Paramount Parks and (briefly) met him and his managment team in 2006 during the purchase, he boasted that his team sends him *fax* updates of each park's daily attendance.

I wish I were joking.

From 98.28.243.251 on December 17, 2009 at 7:15 PM
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.
From 65.69.65.60 on December 17, 2009 at 7:53 PM
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.
From James Rao on December 17, 2009 at 8:37 PM
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.

One flaw in your magnanimous gesture of good will toward all those folks employed at Worlds of Fun: the park has been operating in the black for years. It is actually a fairly profitable park.

Why close down a cash cow?