From Derek Potter on July 10, 2007 at 7:20 AM
I'm sort of surprised at this, but not really. Cedar Fair has expanded a lot since 2000 with the purchase of Michigans Adventure, Geauga Lake, and the Paramount Parks. They've taken on a lot of debt really quickly...(cough six flags cough). While I'm glad to see the brand expanding, I think it's gone maybe a little too quickly. The Paramount park chain was a golden oppurtunity, and they capitalized on it...which stretched them a lot. What this buyout does is provide the company with more capital to pay down their debt quickly and without possibly hindering the improvement of the parks. The question is this...will anyone buy? 3.5 billion dollars is a lot of money for a park chain, even a proven moneymaker like this one. The clause about the management staying is what relieves me. The management core has for the most part done a good job, and Nobody wants a bunch of businessmen who know nothing about entertainment running a park chain, least of all the one that immediately surrounds my area. Even if there are no buyers, it doesn't spell doom for the company. I just think they are looking for debt relief without having to scale back expansion and improvement.

In a lot of cases, a buyout like this one is the first step in taking the company public. The company used to be public, but changed to a limited partnership in the 80's after a couple of takeover scares. Wouldn't be surprised to see that happening soon.

From Larry Zimmerman on July 10, 2007 at 1:53 PM
I think they'd better hurry before Wall Street figures out the cash flow!

From Thomas Miller on July 10, 2007 at 2:56 PM
Living in Ohio and growing up in Cleveland and living now in Dayton, I have a lot of memories and visits to the olde Cedar Point of the 1960's. (I watched the moon landing in 1969 at the Hotel Breakers TV set) But watching what Paramount did with Kings Island and visiting Carowinds and Kings Dominion in the early 1990's, I saw the successful entertainment tie in with the movies and cartoon characters, and live entertainment. I did pay extra for a season pass to Kings Island and all the other Cedar Fair parks, but not extra to get the water parks. (My kids and grandkids are in LA) I visited Knott's Berry Farm last month and did see that this park needs upgrades to the areas such as retail inside the park and layout to help with the flow of people to various places in the park without getting into a dead end street. Has anyone seen the indoor water parks near Cedar Point and Kings Island? Northern States without year round operations can provide lodging and fun and a theme park next door. Does Cedar Fair have a financial interest in them?

From Joseph Boone on July 14, 2007 at 1:41 AM
When I read articles about selling to a private equity firm to pay down debt and raise cash it really makes me wonder. Maybe Cedar Fair believes it, but I'm pretty skeptical of that scenario. Private equity firms rely heavily on debt to make their deals. They get money from investors and the way they maximize the return on that money is to use as little of it per deal as possible. The more of the purchase price they can pay with debt, the better the return will be when they sell the company.

So when you sell your business to them, you can generally expect that you will be servicing more debt, not less. Granted, a smart equity firm will leave enough money in to run the business well but this may mean a lower selling price than Cedar Fair would hope for. If the buyer can't draw out as much cash, they won't pay as much.