adopting a so-called "poison pill" strategy to avoid a hostile takeover bid, Six Flags this week took additional steps to keep the amusement park company operating while its parks are closed.A week after
Six Flags has gotten its lenders to agree to add $131 million to its revolving credit facility, taking it up from from $350 million to $481 million. The company said in a press release that it has $23 million in cash on hand, but that with its credit facility, "the company expects to have ample cushion under its debt covenants until at least the fourth quarter of 2020, even if the parks were to remain closed through September."
To cut costs, Six Flags said that it is deferring or eliminating at least $40-50 million of discretionary capital projects planned for 2020 and intends to eliminate at least $30-40 million of additional non-labor operating costs this year, including spending announced last year "to improve guest experiences." The company also has suspended all dividends and stock buybacks and suspended all spending on marketing and advertising. (FWIW, that's the one that hits me.)
Six Flags previously announced a 25 percent cut in pay for all salaried employees, including executives, and a reduction to 30 hours a week for all full-time hourly employees. The company also has "eliminated nearly all of its seasonal labor costs," in other words, dismissed or not hired any seasonal employees.
With all that, Six Flags estimates that it will be spending a net $30-$35 million per month while its parks are closed. "The company believes it has sufficient liquidity to meet its cash obligations until the opening of the 2021 operating season," it said in the press release.
Six Flags' stock closed today at $14.29, which is up from its March 18 low close of $10.36 but still well below the mid-$40 range where the company was trading before its China deals went south, costing it millions in licensing revenue. Six Flags has announced that its parks will be closed until at least mid-May, though it hopes to reopen "as soon as possible thereafter." The company is giving its members a free one-level Membership upgrade for the remainder of 2020 as well as extending season passes by the number of days that the parks are closed.Tweet
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