Have you ever known anyone who opened a new credit card to get money to make the payments on their existing credit cards?
Sure, you do. Because that is - in a very oversimplified way - basically what Six Flags is doing now. In a press release today, the company announced that it will issue $1 billion in Senior Notes due 2032, with the proceeds paying off previously issued Notes that are due next year.
Here is the legalese: "The Company intends to apply the net proceeds from the Offering, together with cash on hand, towards the full redemption (the 'Redemptions') of the Company’s 5.375% Senior Notes due April 15, 2027 and 5.500% Senior Notes due April 15, 2027 (collectively, the '2027 Notes') and to pay accrued and unpaid interest on the 2027 Notes, if any, to, but not including, the redemption date, and to pay fees and expenses in connection with the Offering and the Redemptions."
It's hardly uncommon for companies to shuffle debt. Theme and amusement parks are capital intensive businesses that often borrow big to develop attractions that will pay off later. But Six Flags is getting very much crunched by its debt right now, to the point where it just yesterday declined a deal to buy full ownership of its original theme park. And the company closed its Six Flags America park in Maryland last year, too.
For more Six Flags and theme park news, please sign up for Theme Park Insider's weekly newsletter.
It's crazy to see Six Flags unable to break its cycle of stupidity as they continue to make the same moronic decisions over and over again expecting different results. Unlike the_man26, I did think the "merger of equals" between SF and CF would result in a leaner, more efficient company. While there are definitely examples of poor performing companies teaming up and not improving their fortunes, but there have been instances where mergers have resulted in a leaner, more profitable company. I always take anything that Six Flags says or does with a grain of salt, and was understandably skeptical of how the combined company would perform after the merger, but thought they had the opportunity to find success if they allowed former Cedar Fair decision makers to lead the way. However, it does seem like hubris from the former SF management has allowed to fester within the company from the financial side (I do see improvements from an operational standpoint) that it is dragging the new Six Flags back into the same cycle of despair that existed before the merger.
This combined with the inability to find funding to purchase full control of the chain's namesake original park is almost as damming to the company's management as its Chapter 11 bankruptcy filing in June 2009 under Dan Snyder. I'm not sure where this eventually leads, but it certainly doesn't bolster my confidence in Six Flags or my hope that the company will make competent decisions to get themselves out of their current predicament.
When someone told me this earlier, I immediately thought "fake news", yet here we are. In a bizarro world, adding two negatives creates a positive. I am interested in seeing how much they bag off with the SFA sell.
You must be registered and logged in to submit a comment.
I said this when the merger was announced and I am going to keep saying it, when two struggling companies merge and say they are going to do better by lowering costs through economies of scale, it usually doesn't work. I don't think I've ever seen it work once. Sears/K-Mart, Chrysler/Daimler, Sprint/Nextel, HP/Compaq.
If your company is drowning in debt and has a bad reputation with its customers, taking out more debt to make the company bigger doesn't fix the problem.