Cedar Fair Corporate Development Discussion Thread (FUN)

[usctrojansrock11]

They could have spent that 6.5 Million on a GCI Woodie for Cedar Point

[larrygator]

Very true, I agree. New leadership is needed. I think they need to drop a few of the parks that are not making profits, *cough* (great america) *cough*... Good for Cedar Fair though.

 

How do you know that CGA is not profitable? Where did you hear this, I'm fairly certain that every park is profitable but in totality not generating enough profits to pay down corporate debt.

[larrygator]

If anyone is interested in talking about Six Flags and their restructuring issues we have a thread for that:

 

Six Flags restructuring thread

[Tbcoasterfan]

Jew, I'm sorry I have to disagree with you. I think long term they are doing just fine. I think they'll do well this year and be in a position to pay down more debt. Stacy Frole said they are working with their creditors. I would however not be surprised to see a park sold in the near future.

[Jew]

^What are they doing long term that is going to improve the companies ability to pay down their debt?

 

Discounting season passes? Investing in coasters? That worked out great for Six Flags.

[Tbcoasterfan]

^What are they doing long term that is going to improve the companies ability to pay down their debt?

 

Discounting season passes? Investing in coasters? That worked out great for Six Flags.

 

I'd be lying if I said I knew however all i can point to is their past performance. I do think there will be some sort of shakedown in upper management. I believe they all meet in June so I bet something happens. Attendance, specifically group sales, were down in 2009. With the economy starting to rebound, and hopefully better weather this summer, I predict 2010 will be a better year.

[jedimaster1227]

http://www.sanduskyregister.com/articles/2010/04/12/front/2005960.txt

 

Apollo's takeover bid may be gone, but Cedar Fair officials already are preparing for another possible takeover attempt. The amusement park chain has prepared a poison pill to feed any would-be predator trying to gobble up the company in a hostile takeover bid. The company filed the poisonous rights plan this week. It was created "to ensure that all unitholders receive fair and equitable treatment in the event of any hostile takeover attempt to gain control of the company," Cedar Fair leaders explained in a news release.

 

Cedar Fair filed documents with the Securities and Exchange Commission explaining the rights plan would be triggered if any company acquired 20 percent of more of Cedar Fair's outstanding units. The plan has several provisions designed to make it harder to take over Cedar Fair against the wishes of the company's management.

 

Under one scenario, for example, each current unitholder would have the right to buy $20 worth of additional units for each unit the investor owns, at a price that's essentially a two-for-one deal. "Assuming a value of $10 per unit at such time, the holder of each valid right would be entitled to purchase four units for $20," the document states. Adding more units would dilute the ownership of the company attempting the takeover.

 

Such poison pill options are rarely exercised. The point is to force any company trying to take over Cedar Fair to negotiatiate with the company.

 

The provision also buys Cedar Fair time to consider its options as it attempts to deal with $1.6 billion of debt, said Jeremy Jacobs, a Cedar Fair spokesman. "The company is aware that the credit markets seem to be improving and it's talking with its banks in that context to see how they can address the capital structure to the benefit of unitholders," Jacobs said.

 

Cedar Fair carries $1.54 billion of term debt, $640 million that matures in 2012 and $900 million that matures in 2014, said Stacy Frole, director of investor relations for Cedar Fair.

 

"The rights plan was not adopted in response to any specific effort to acquire control in the company," Frole said.

 

Texas investment banker Geoffrey Raynor holds about 18 percent of Cedar Fair's outstanding units, much of them through Raynor's company, Q Funding. On Tuesday, the same day the Apollo and Cedar Fair deal fell through, Q Funding filed an SEC document stating that it had been approached by "certain holding company bondholders" to discuss the possibility of merging Cedar Fair with Six Flags. "It became apparent ... that these holding company bondholders were likely going to control Six Flags, Inc. and, since then, there have not been any additional conversations with such bondholders," the document said. The document didn't identify the bondholders and a spokesman for Q Funding declined comment.

 

The Reuters news agency has reported that a group led by Stark Investments is poised to take control of Six Flags under a new restructuring plan filed by the bankrupt company.

 

The speculation about Six Flags and Cedar Fair hasn't hurt Cedar Fair's unit price. The closing price Wednesday was $12.87, up 50 cents from the closing price the day before.

[DJeXeL]

Stock has seen a steady gain since Apollo deal fell through. It's at $14.52 currently. I wouldn't be surprised if it was up to $18 by the end of May. Definitely a good sign.

[Bolliger&Mabillard]

^But the only reason it saw a rise was because Q3 and Q4 bought up a shiz-load of share to gain more votes. If management cna't figure out what to do with this debt, the stock price is just going to tank again.

[larrygator]

No it has been seeing a rise because one analyst recently valued the company at $18 a sale, showing how foolishly low the bar was set for the sale to Apollo.

[Steelinwood]

Do you think all of this happened due to the unitholders opinions. What do you think they're reactions will be in the future?

 

I also think should put in a gci, but as of now it's probably unlikely!

[jedimaster1227]

http://toledoblade.com/article/20100422/BUSINESS03/4220353/-1/BUSINESS

 

Its deal to be acquired by a private equity firm dead, Cedar Fair LP is moving on with its corporate life by trying to reduce its $1.6 billion debt and wondering what plans its largest shareholder may have in store. Since the $2.4 billion deal with Apollo Global Management was ended by mutual agreement April 6, top executives of the Sandusky-based amusement park chain have been meeting with lenders to negotiate better terms for the company's huge debt load.

 

Company Chairman and Chief Executive Dick Kinzel, Chief Financial Officer Peter Crage, and corporate Treasurer Roger Allen "have been meeting with banks all last week and this week," said Stacy Frole, Cedar Fair's investor relations director. "What we're hearing is that the markets are opening up. It's difficult to gauge that until you go to the markets to determine whether that's the case or not, so that's why they're out there."

However, she declined to say whether Cedar Fair executives have met or talked with officials of Texas investment funds Q Funding III and Q4 Funding, which together control 18.1 percent of Cedar Fair's shares. The funds, known collectively as Q Investments, filed a statement this month with the U.S. Securities and Exchange Commission indicating the funds "now intend to engage in conversations with the [Cedar Fair] and all other interested parties about the future of the [Cedar Fair]." A spokesman for Q Investments said fund officials will not elaborate on that statement or reveal if it has had had conversations with the northwest Ohio firm.

 

Asked whether Cedar Fair is considering changing its corporate structure, Ms. Frole said that is not considered a priority. When the Apollo deal fell apart, Cedar Fair said in an SEC filing that some shareholders might face higher tax liabilities because the limited partnership was no longer paying a quarterly distribution that in the past offset some of the tax obligation. Instead, she said, the company is focused on increasing attendance and customer spending this year at its 11 amusement parks and six water parks. "I don't think it's any secret that 2010 is going to be a very important year for us," she added.

 

The company is counting heavily on a pair of new $20 million roller coasters, at its Kings Dominion park in Virginia, and its Carowinds park in Charlotte, N.C., to boost attendance that was down 7 percent overall in 2009 at Cedar Fair parks. The coasters feature a NASCAR theme and have had big crowds in their initial weeks of operations, said Paul Ruben, an editor at Park World magazine. "Historically, when a park puts in a major coaster, you see a jump in attendance between 5 and 15 percent," he said.

[tanthonyam]

Paul Ruben is still around???

[monsterfan99]

^He sure is and writes for ACE's magazine as well.

[jedimaster1227]

http://www.sec.gov/Archives/edgar/data/811532/000089742310000071/cedarfair14a12.htm

 

Dear Gentlemen:

 

We have come to the conclusion that we must now communicate with other unitholders in advance of the June 7th meeting. It is now our plan to express our views to other unitholders that the board of directors needs "new blood" given the events that have transpired over the previous months. We plan to ask for their support in replacing two directors on the board with new directors who will bring new thoughts and ideas.

 

We do not ourselves have any desire to serve on the board, nor to have any of our affiliates serve on the board. We have retained Spencer Stuart to identify independent and qualified candidates. We believe it would be in the best interest of all unitholders for representative unitholders to interview candidates and will be asking them shortly to do so. We also plan to seek the company's views on each candidate before we decide who ultimately to put forth as candidates. We believe, as I am sure you do, that unitholders should have a significant voice in the process of picking their representatives on the board.

 

We understand through our legal counsel that you have thoughts on how we might work together through this process. Although many details still need to be worked out, we are optimistic that we can reach an agreement that works for all parties and therefore eliminate the need for us to put forth our own candidates and proxy statement. However, we as unit holders still need to be prepared for this eventuality should the need arise.

 

We look forward to having further discussions.

 

 

Sincerely,

 

 

Q Funding III & Q4 Funding

[Jew]

...And now we know why Cedar Fair went ahead with the "poison pill" plan. This is going to be fun.

 

It's also another step in the "Cedar Fair is becoming Six Flags" evolution. We are now entering the "Daniel Synder takeover" phase.

[DBru]

And the crowds rejoice!

[the ghost]

I am reading the thing and having no idea what it says. My mind is fried from studyuing for a math test tomorrow, so what exacltly is going on?

 

The Im Stupid Ghost

[monsterfan99]

This takeover attempt in the making is going to be messy and fun all at once.

[DBru]

^^Two members of Cedar Fair's Board of Directors (the people who meet and make decisions) are being replaced with new members...people with new, fresh ideas that won't lay down at the feet of Dick Kinzel and automatically agree with his every remark.

[the ghost]

AWESOME!!! Rebel against Kinzel, change rides names to more creative names. Destroy the trash cans. Save Knotts. This is making me happy.

 

^Thanks, this is cool.

[jedimaster1227]

http://www.cedarfair.com/ir/press_releases/index.cfm?current_root=15&mode=story&story_id=238

 

Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today announced that it has reached an agreement with its largest unitholder – Q Funding III, L.P. and Q4 Funding, L.P. (“Q”) – that will allow Q to participate actively in the Company’s selection of new directors.

 

Under the agreement, the Company will increase its Board from seven directors to nine immediately following the Company’s 2010 Annual Meeting of Unitholders, scheduled for June 7, 2010. The two new Directors will be selected from a list of candidates developed by the executive search firm of Spencer Stuart, which Q has retained, based on criteria developed by the Company and Q. The Company and Q will mutually agree upon two Class I Directors, with a term expiring at the Company’s 2013 Annual Meeting of Unitholders. If the Company and Q are unable to agree prior to the Company’s 2010 Annual Meeting of Unitholders, then the Company and Q will each select one Class I Director in their sole discretion. The Company has agreed to reduce the Board back to seven directors by the Company’s 2011 Annual Meeting.

 

In addition, under the agreement, Q has agreed to voluntarily dismiss the action it filed on April 29, 2010 in the Court of Chancery of the State of Delaware against the Company and its general partner. Q has also agreed to vote all of its units on the two matters to be considered at the Company’s 2010 Annual Meeting of Unitholders as recommended by the Board.

 

“Maintaining a strong, independent Board of Directors is critical to the Company’s long-term success,” said Dick Kinzel, Cedar Fair’s chairman, president and chief executive officer. “We appreciate Q’s ongoing interest in the Company, as well as its willingness to work with us in our mutual pursuit for long-term unitholder value creation.”

 

“We believe Cedar Fair is a company with significant opportunities,” said Scott McCarty, Portfolio Manager at Q Investments. “We welcome the opportunity to help identify additional directors who can help management to progressively realize this potential in 2010 and beyond.”

 

http://www.cedarfair.com/ir/press_releases/index.cfm?current_root=15&mode=story&story_id=237

 

Cedar Fair Entertainment Company (NYSE: FUN), a leader in regional amusement parks, water parks and active entertainment, today announced results for the first quarter ended March 28, 2010. Historically, first quarter results represent less than 5% of the Company’s full-year revenues.

 

Net revenues for the first quarter of 2010 increased 3% to $27.3 million, compared with $26.5 million for the first quarter of 2009. The current year increase was primarily due to increases in early-season attendance in the Company’s western and southern regions.

 

The Company operates at a loss during the first quarter as the majority of its seasonal parks are closed during this period. Operating results for the first quarter include normal off-season operating, maintenance and administrative expenses at the Company’s seasonal amusement and water parks, and daily operations at Knott’s Berry Farm and Castaway Bay. The operating loss for the first quarter increased to $60.6 million from $56.3 million in 2009. This is due primarily to an increase in selling, general and administrative expenses attributable to legal and other costs incurred in connection with the now terminated merger with Apollo Global Management, as well as the approximately $1.0 million negative impact of exchange rates on the Company’s Canadian operations in the period.

 

“Our pre-season operating costs were in line with our expectations for the quarter,” said Dick Kinzel, Cedar Fair’s chairman, president and chief executive officer. “Only four of our 17 properties were in operation at the end of the first quarter. The other parks, including our largest seasonal parks – Cedar Point, Kings Island and Canada’s Wonderland – were in the final stages of preparing to open for their operating seasons.”

 

Interest expense for the first quarter increased $712,000, or 2%, to $29.6 million, compared with $28.9 million in 2009, due primarily to higher interest costs on the $900 million of term debt that was extended in August 2009 for a period of two years. A net credit for taxes of $57.8 million was recorded to account for the tax attributes of the Company’s corporate subsidiaries and publicly traded partnership taxes during the first quarter of 2010, compared with a net credit for taxes of $31.9 million in the same period a year ago. After interest expense, credit for taxes and a $7.6 million non-cash charge to income for the net effect of swaps, the net loss for the first quarter ended March 28, 2010, totaled $39.9 million, or $0.72 per diluted limited partner unit. For the first quarter ended March 29, 2009, the Company reported a net loss of $53.3 million, or $0.97 per diluted limited partner unit. Excluding $3.8 million in merger related costs and the non-cash charges on the swaps, the current quarter net loss would have been $29.2 million, or $0.53 per unit.

 

Cash and Liquidity

Peter Crage, corporate vice president finance and chief financial officer, said, “In terms of both liquidity and cash flow, we are comfortable with where we ended the first quarter of 2010, given the realities of our current capital structure. In the past year, we have been able to reduce our debt by over $120 million and our cash position – together with existing lines of credit, which do not expire until August 2011 – provide sufficient financial flexibility to manage our near-term working capital needs. However, more work needs to be done. Creating a sustainable long-term capital structure and strengthening our balance sheet are top priorities so we can take full advantage of long-term growth opportunities and consider a distribution at an appropriate time in the future.”

 

As of March 28, 2010, the Company had $1.5 billion of term debt and $216.0 million in borrowings under its revolving credit facilities. Of the total term debt, $15.5 million is scheduled to mature within the next twelve months.

 

To ensure that it can take full advantage of both near- and long-term opportunities, the Company announced that it has engaged J.P. Morgan to evaluate opportunities available to us in the capital markets. “After meeting with several banks and carefully considering their proposals, we concluded that J.P. Morgan brings the experience and perspective we need as we consider a full range of financing arrangements to provide the greatest benefit for Cedar Fair and our unitholders,” said Kinzel.

 

2010 Operating Season and Outlook

Kinzel noted, “Now that Cedar Fair will remain independent and publicly owned, our key focus going forward will be on operating our parks and strengthening the company’s balance sheet. The combination of our well-run properties, improving business conditions and ability to generate significant cash flow should support our ongoing plans to aggressively restructure our debt and grow the value of our company. We are hopeful that 2010 will show a nice improvement compared with what we saw in 2009.”

 

Kinzel said Cedar Fair enters the 2010 operating season with momentum driven by investments in several major new attractions, as well as new shows and strong marketing programs. To date, seven of the Company’s ten seasonal amusement parks are in operation. “Although it is too early to have a clear picture of how the season may play out, we are encouraged by the initial, positive trends in attendance, season ticket sales and group sales at the parks that are already open,” he said. “We are hopeful that the weather and overall economy will allow these early trends to be sustained over the course of the season. We are aggressively doing all that we can through traditional marketing methods as well as online and social media to capture our guests’ attention and bring them to our parks, and then demonstrate the outstanding value we offer in a full day of entertainment.”

 

Kinzel pointed out that the Company’s strong 2010 capital program features a variety of new shows and attractions at all of its parks, as well as two new roller coasters at Kings Dominion and Carowinds, a family thrill ride at Cedar Point and more than 50 live shows. For the 2010 season, the Company expects to invest approximately $90 million in capital improvements across its properties. “Our capital projects have been completed or are scheduled to be completed on time and on budget, our marketing programs are in place and guest comments have been positive,” Kinzel added. “While our first quarter is not a meaningful part of our full-year financial performance, we are pleased with the level of public interest in our new rides and attractions thus far. As long as our parks perform as we fully expect them to, we remain confident that we can generate revenue growth of 3% to 5% over last year’s $916.1 million level, and full-year adjusted EBITDA, excluding costs incurred in 2010 in connection with the now terminated merger, in the range of $320 million to $340 million.”

 

Acknowledging that the broader economy may continue to be a challenge this year, Kinzel said Cedar Fair is up to the challenge. “While we have a long history of performing well during difficult economic periods, we know that focusing on operations remains critical,” he said. “We believe our high-quality parks and resorts will continue to fulfill the need for entertainment among families that don’t want to travel long distances for vacation. Our employees have worked hard to prepare the parks for the season, and we work hard every day to provide our guests with an outstanding experience.”

 

Conference Call

The company will host a conference call with analysts today, May 6, 2010, at 10:00 a.m. Eastern Time, which will be web cast live in “listen only” mode via the Cedar Fair web site (http://www.cedarfair.com). It will also be available for replay starting at approximately 1:00 p.m. ET, Thursday, May 6, 2010, until 11:59 p.m. ET, Thursday, May 20, 2010. In order to access the replay of the earnings call, please dial 1-800-406-7325 followed by the access code 4284146.

[Skycoastin Steve]

AWESOME!!! Rebel against Kinzel, change rides names to more creative names. Destroy the trash cans. Save Knotts. This is making me happy.

 

^Thanks, this is cool.

 

So you want overflowing trash cans and litter on the ground?

[Jew]

^Properly staffing/training your park services staff > Placing cheap plastic trash cans everywhere

[Cavs Fan]

Emptying trashcans>Picking up garbage off of the ground.