Six Flags May Not Survive 2009...

[Sir Clinksalot]

Personally I think the biggest mistake (purely from an economic standpoint, personally I would have hated to see this happen) that Six Flags made was not selling SFMM a few years ago when the rumors were going around. That land was worth a lot more then then it is now, and a sale could have made a substantial impact on the chains debt. With that said I am still somewhat curious how close Six Flags did come to selling SFMM, were they in fact shopping it and just failed to find somebody will to pay enough. These are questions that I don't think any of us can really know.

 

I believe they were going to sell it to a housing developer during the real estate boom. So yeah, they would definately have gotten more out of it then than they would now.

 

The developer would have lost TONS of money though as I'm quite certain construction would have stopped due to the current housing crisis. I don't think houses are being built anywhere in SoCal, at least not that I can tell.

[Jew]

^I think it is more accurate to say wanted to capitalize on the housing market by selling to a developer, but quickly realized they weren't going to get enough to make it worthwhile to them.

 

In theory it is a great piece of land for a giant housing tract...until a developer realizes it would have to get the property re-zoned, environmental reports, cleaning up the land to be suitable for development (they'd have to dig up all the footers, remove gas and electrical lines, grade the land, and so on).

 

Plus the only logical buyer is Newhall Land and Farming, so they probably didn't get the bidding war they were anticipating.

[Sir Clinksalot]

^ True. True.

[CoasterEricHP]

You know.. I was at the PRPS (Pennsylvania Recreation and Park Society) Convention today in Hershey. They had people from Dorney, Morey's, Hershey, Busch Gardens, and Six Flags.

 

Everytime I tried to talk to the Six Flags lady about ANYTHING she was either not there.. or talking on her cell phone. This was over a time span of four hours!! I never saw her talking to anyone but her cell phone! I just kind of laughed and thought to myself that her lack of caring is pretty much the standard Six Flag's attitude.

 

Thats my little story of the day! All of the other park rep's were awesome!

[CoasterNews.Net]

Six Flags has released their operating results for 2008:

 

Full Year 2008 Adjusted EBITDA(1) Increases 45% to a Record $275.3 Million on 5% Revenue Growth and Reduced Costs and Expenses

• 
  * Full Year 2008 Operating Income More than Triples to $144.0 Million
  * Positive Free Cash Flow(1) Achieved for Full Year 2008 for the First Time in the Company’s History
  * Fourth Quarter Adjusted EBITDA Reaches $5.2 Million and, Excluding Certain Non-Cash Items(2), Loss From Continuing Operations Per Share Improves to $0.83

 

Check out the full release here: http://sev.prnewswire.com/null/20090310/NY8110610032009-1.html

[Crazy4Coasters!]

Nice, sounds like an outstanding year overall for Six Flags corp. They nicely tripled their revenue so I assumed they exceeded their expectations. This is a great sign for their future and hopefully this trend becomes a regularity instead of an uncommon occurrence.

[ChrisZer0]

Im going to guess part of this is due to them changing their price structure on admissions. I wonder if Mr. Six figured into the equation as well??

[Evan1127]

What I am worried about as an investor is the following:

 

The Company's Preferred Income Redeemable Shares ("PIERS") are required to be redeemed for cash on August 15, 2009 for $287.5 million plus accrued and unpaid dividends, which totaled $15.6 million at December 31, 2008. The Company does not expect to have sufficient cash to redeem the PIERS at their redemption date. The PIERS redemption is just one component of the comprehensive restructuring of the balance sheet that the Company is pursuing. Accordingly, the Company's 2008 Annual Report on Form 10-K will include the disclosure of risk factors associated with the Company's liquidity, pending PIERS maturity and the restructuring effort.

[Manic Monte]

^ That isn't really surprising though. Despite these numbers, I'm expecting a Chapter 11 and major restructuring announcement any day now.

 

In the end I think the company will come back stronger than ever, though perhaps much smaller.

[Bolliger&Mabillard]

^Hey if you have to cut off the hand to save the arm, go for it.

[larrygator]

In the end I think the company will come back stronger than ever, though perhaps much smaller.

 

Do you THINK this will happen or do you HOPE this will happen?

 

I'm hopeful but I don't know what to think anymore. The creditors don't give a rat's tail about amusement parks. They just need to recuperate money, as quick as possible sometimes.

[Zero One]

Ah hem.

 

Saying that "creditors don't give a rat's tail about amusement parks" is incredibly short-sighted. They do care, or they wouldn't have invested in the company in the first place.

 

Chapter 11 would allow Six Flags to get rid of their crushing debt (the only thing that is really wrong with the company right now, revenues and other expenses are good) and creditors would get a significant stake in the restructured company. To make the most money, it makes the most sense for creditors to be interested in Six Flags as a going concern.

 

Chapter 7, on the other hand, would be a quick liquidation of the assets at far less than they are worth (current book value is $3 billion now... but think pennies on the dollar if they had to be sold). Creditors would be out a lot of money in that situation.

 

Six Flags doesn't have any fundamental operations problems (revenues exceed expenses, still plenty of customers, etc.) so a Chapter 11 plan (or even a plan that would avoid bankruptcy) to reduce the debt but keep running is most likely.

[larrygator]

Let me rephrase - creditors have a monetary interest not an emotional one.

 

If an investment does not make money they will liquidate in a heartbeat if liquidating provides money that can be invested elsewhere.

 

One thing the amusement parks have going for them right now is that the lenders don't have a lot of options where to invest for surefire gains and are willing to erode a company like Six Flags through payments which inlcude a lot of interest on the current debt.

[ChrisZer0]

For me, its a THINK and a HOPE they sell off the remaining regional parks and focus on the core nine (seven parks + 2 water parks) accordingly.

[AllenA07]

^I've got to agree on this one. I think it is a nice thought that all these people who invest in amusement parks do so because they have fond childhood memories of riding leap the dips and eating cotton candy in the midway. When in all reality they are invested because at the time they saw potential to make a profit.

 

For many years now (I don't have the money to make it worth my while, so I've holding off) I have been thinking about investing in Six Flags, and have been watching the stock. From just that I can see a potential problem for me is that once I'm monetarily invested my heart is going to follow my money. Your favorite park not getting a coaster is FAR less important then me not getting a return on my investment.

 

The point of all of this is, people invest because they think they can make a profit, not (generally) because they have a deep love of the industry. I would consider investing in amusement parks not because of how much I enjoy them, but rather because I feel I have more knowledge about parks then the average person does. I would hope I would be able to use that knowledge to follow trends in the industry. In contrast if I invest in widgets, I've got no working knowledge of the widget industry. I wouldn't be able to spot trends and I feel that in the short term (long term I attempt to learn about the widget market) that would hurt me.

 

Wow, all of that to make the point that people invest because they think they'll make a profit, not because they have a love for the industry. As it goes right now I wouldn't be investing in any park chain. Cedar Fair is looking better, but I would take their announcement of looking to sell parks as a red flag warning that not all is well.

 

When is Six Flags set to get delisted, I know they've been trading under $1.00 for a while. Any news on a possible reverse stock split coming up, my guess is they'd want to hold off on that because share holders are not going to be big fans of such a move, though it is better then being delisted.

[spaceace12]

For right now, delisting has been on hold. No company can be delisted right now.

[ParkTrips]

What I am worried about as an investor is the following:

I would guess that, in the least, they will just convert all shares to shares in the common stock. Obviously the markets expected that, hence it trading at $0.55. Would be nice to see them pull through and at least restructure the payment

[MagicMountainMan]

Well the LA Times came out with a quick article about how Six Flags is at risk for bankruptcy... Nice to see that they talked about how Six Flags just posted a positive cash flow last year for the first time in company history, NOT.

 

It would be nice if the media would actually report that Six Flags is making money too. But instead they focus how they have a massive amount of debt and how they will probably have to file.

 

I am a firm believer in that the media can sway the market and the stock for Six Flags is no different. They report on how Six Flags has a huge amount of debt but gloss over the fact that they are actually doing good business, just not good enough to make up for all the squandering and spending that the past management brought upon the company.

 

Here's the link to the story.

[generaleclectic]

I think it is a nice thought that all these people who invest in amusement parks do so because they have fond childhood memories of riding leap the dips and eating cotton candy in the midway. When in all reality they are invested because at the time they saw potential to make a profit.

 

Oh, I dunno about this. David is a stock broker for a living and is usaully pretty dead on with his prognostication of whether or not a company is going to tank. We knew that this was going to be a rough time for SIX when we jumped into the stock, but didn't realize it was going to perform THIS badly. Truth be told, I expected FUN (Cedar Fair) to tank first. How THEY are up over Five Bucks is beyond me. More to the point though, we bought it for the novelty because it was so cheap at the time that we bought it. We're still holding out hope that it'll rebound. SIX has surprised us all in the past.

 

When is Six Flags set to get delisted, I know they've been trading under $1.00 for a while. Any news on a possible reverse stock split coming up, my guess is they'd want to hold off on that because share holders are not going to be big fans of such a move, though it is better then being delisted.

 

If the common stock does not break $1.00 before the May shareholders meeting, a point of order will be raised to reverse split. It has already been "pre-announced" in a letter to shareholders dated October.

 

I've been reading this thread for about an hour now, and some of the points raised are valid as park ops go. There are several things that SIX has got to get off their plate.

 

#1: JAZZLAND!!!! SIX is bleeding through their eyeballs with this albetross on their backs. It's still costing SIX an exhorbenent amount of money to have the property when you calculate in the legal fees for battling the insurance companies, the legal fees for battling the City of New Orleans, the limited security staff that SIX has to keep in place because of insurance purposes, removal of a couple of the rides from the property and relocation of said rides, AND destruction of several buildings that the City of New Orleans condemed because of the health hazards involved as a result of Katrina flooding. I think most irritating of all this is the fact that SIX HAD A FREAKIN OUT!!! They were in talks with Southern Star for most of 2008. Southern Star proposed to buy the park, the rides, the land from the City of New Orleans, the surounding land owned by Six Flags, obsorb debt associated with the park AND assume ownership of the 75-year lease that SIX is bound to with the city. According to an article in the New Orleans Times-Picayune dated October 1, 2008, both companies had abandoned talks because they couldn't agree on price. See the entire article here:

 

http://blog.nola.com/tpmoney/2008/10/potential_buyer_of_six_flags_n.html

 

If I had to guess, I'd say that SIX is holding out hope that the insurance will eventually pay off on the park. With the current ecconomic depression that we're in, (Yeah, I used the d-word. Discussion for another thread) I don't see any insurance money coming into SIXes hands until sometime MAYBE in late 2010.

 

#2: A point was raised about SIX having gone APE with buying up new parks in the last 10-15 years. You know, I have to agree with the minority on the point of selling those parks. With the current ecconomic turmoil that is being experienced, I'd say that the best course is to hope to ride out a reverse split of the common stock, then file Chapter 11, then start selling as many of those parks to the highest bidder. I feel in my heart of hearts that the Disney goers are going to opt for the cheaper DAYcation in lieu of spending THOUSANDS of dollars on a luxury week long stay at Disney. Here again, I think that perhaps SIX needs to go back to Southern Star on hands and knees and beg them back to the table.

 

#3: Someone within this thread stated that one of the municipalities where one of the SIX parks is located would do everything in its power to help keep the park going. Cobb County, Georgia, where SFOG is located, has made similar statements when SFOGs status came into question. Not only is it a Georgia Landmark, but is the Atlanta area's #1 employer of persons under the age of 18 both within and outside the 285 loop. It has been the #1 employer of persons under the age of 18 since it opened. While the amount of traffic that the park sees from year to year has vacilated wildly, it still makes up a LARGE PART of the ecconomy for Cobb, Fulton and DeKalb counties. It's a forgone conclusion that most folks who go for an Atlanta Braves game, usually hit the park while in town. SFOG isn't going anywhere.

 

#4: What's going on at Six Flags America?!? Could we close that place already?? I traded opinions on that park some months ago after East Coast.

 

I can't comment on any of the other parks because either I haven't been or haven't done the research. Sufice to say that SF as a company is only hurting from a management standpoint. MANAGEMENT PROBLEMS CAN BE FIXED!!! I brought a large, struggling ISP in South Georgia out of the red and into profit turning status in under a year when I was in my mid twenties with far fewer resources. It boils down to a few things IMHO:

 

A: Cut Costs

B: Reorganize Debt

C: Turn Over Management <-- UBER IMPORTANT

D: Analyse assets and profit margins associated with same

 

I believe in my heart of hearts that we'll be seeing Mr. Six dance once more so long as the board of directors and the majority shareholders don't stick their heads in the sand like they have in the past.

[Jew]

^^The problem is none of the good Six Flags is doing means anything if they can't get the debt restructured.

[chemical_echo]

^That was a really F***ed up clip. Now that I'm a Six Flags employee those statements hurt me deep. Yes I know it's a comedy type of show but 6 Flags is better than what that guy said.

I know this is an older quote, but seriously?

 

The guy made fun of my entire town and nobody here was really offended. In fact, we loved it. We got the Colbert Bump, all because our hockey team threw a bunch of stuffed bears on the ice for charity. Colbert Fans from all over Canada and the US came to our town for Stephen Colbert Day (part of a bet our mayor made with him. We lost, we dedicated a day to him).

 

If anything, this could turn to help Six Flags a little. Colbert has a huge following and most things he mentions on his show directly, or indirectly, gets the Colbert Bump. Seriously, one of the names in the running for the new ISS Module is Colbert and A bridge in Europe was almost named the Stephen Colbert Bridge all because he told his fans to go vote on the websites.

[Sir Clinksalot]

Some info from documents just shared with the SEC by Six Flags

 

http://www.themeparkinsider.com/flume/200903/1090/

[Bolliger&Mabillard]

Six Flags says there is 'substantial doubt' the chain will survive

 

By Robert Niles

 

Published: March 11, 2009 at 8:24 PM

 

Six Flags today told the U.S. Securities and Exchange Commission, in essence, if we can't restructure our debt before we have to make more than $300 million in payments this summer, we're going bankrupt.

Here are the notable quotes from Six Flags' most recent 10-Q statement, filed on the SEC website:

 

 

We have had a history of net losses. Our net losses are principally attributable to insufficient revenue to cover our relatively high percentage of fixed costs, including the interest costs on our debt and our depreciation expense. We also have an accumulated stockholders' deficit of $443.8 million at December 31, 2008. Additionally, our Preferred Income Equity Redeemable Shares ("PIERS") are required to be redeemed in August 2009, at which time we are required to redeem all of the PIERS for cash at 100% of the liquidation preference ($287.5 million), plus accrued and unpaid dividends ($31.3 million assuming dividends are accrued and not paid through the mandatory redemption date). Given the current negative conditions in the economy generally and the credit markets in particular, there is substantial uncertainty that we will be able to effect a refinancing of our debt on or prior to maturity or the PIERS prior to their mandatory redemption date on August 15, 2009.

...Accordingly, we have stated in our financial statements included herein that there is substantial doubt about our ability to continue as a going concern unless a successful restructuring occurs.

 

...We may be compelled to seek an in-court solution in the form of a pre-packaged or pre-arranged filing under Title 11 of the United States Code, 11 U.S.C. §§ 101, et seq., as amended ("Chapter 11") if we are unable to successfully negotiate a timely out-of-court restructuring agreement with the PIERS holders, common stockholders and our creditors.

 

In English, that means bankruptcy. 'Cause at this point, with all the nation's major banks essentially insolvent, Six Flags has about as much chance of refinancing as you do winning one of those big stuffed animals with a single coin toss on a Six Flags midway.

 

Scratch that, your chances of landing the four-foot Tweety Bird are better.

 

I posted the article so people wouldn't have to navigate awy from the forum.

[Crazy4Coasters!]

Another article posted on MSNBC...

 

Six Flags May File Chapter 11

By Wendy Harris

MSNBC.com

updated 15 minutes ago

 

The recession may be about to claim another victim. And, this time it's the parent company of a major theme park that is well known in Southern California, Magic Mountain in Valencia.

 

The parent company, Six Flags Inc., says it might need to file for Chapter 11 protection if the situation doesn't improve.

 

Six Flags says it may not be able to repay its debt.

 

The New York based company has until August 15th to pay off nearly three hundred million dollars to preferred stockholders.

 

But, if the company is unable to meet that deadline, filing for Chapter 11 would allow it to operate while paying off creditors.

[AllenA07]

A chapter 11 wouldn't be the worst thing at this point, considering I read a few weeks ago about companies that could end up being forced into a chapter 7, one of which is Six Flags. Plenty of corporations have had to file chapter 11 and have come out of it just fine. It'll be interesting to see what ends up happening.