Six Flags [FUN] Corporate Discussion Thread

[jarmor]

I wouldn't call Joey a SF hater just for being skeptical of a company who files for Ch. 11... how often does it turn into Ch 7 for these companies?

 

Yeah he seems to hate hardrockpark/freestyle park also lol ...

 

Kinda reminds me of the old grumpy man in a retirement home that never gets visitors...

 

Jarvis "Just kidding around" Morant

[mcjaco]

I wouldn't call Joey a SF hater just for being skeptical of a company who files for Ch. 11... how often does it turn into Ch 7 for these companies?

 

I know Joey isn't high on SF since he worked there, so that's the only reason I use that term. We all know he likes to get his digs in.

 

As for 11 going 7, not very often, but we can all hope. If SF can't get out, that's a HUGE hole in the park industry. It's not something I'd like to even think about. Disney, Universal, and Cedar Fair......ugh.

[fisher1095]

I wouldn't call Joey a SF hater just for being skeptical of a company who files for Ch. 11... how often does it turn into Ch 7 for these companies?

 

I know Joey isn't high on SF since he worked there, so that's the only reason I use that term. We all know he likes to get his digs in.

 

As for 11 going 7, not very often, but we can all hope. If SF can't get out, that's a HUGE hole in the park industry. It's not something I'd like to even think about. Disney, Universal, and Cedar Fair......ugh.

 

Yeah, I feel the same... We'd lose the #1 steel coaster in the world and the #1 woodie.. (although the Voyage could take over easily pretty soon)

[Electerik]

^ Hard to say. Some parks would probably be lost, while others would get scooped up by other park chains or new investors.

[FlyingScooter]

^ Hard to say. Some parks would probably be lost, while others would get scooped up by other park chains or new investors.

 

I hope Cedar Fair isn't one of those chains.

[Airtime&Gravity]

Another article from MSNBC which explains what will happen. Click the link to watch a news segment Mark Shapiro.

 

Six Flags will not sell assets or reduce its workforce as a result of its Chapter 11 bankruptcy filing this weekend, the theme park operator's chief executive told CNBC Monday.

 

"This isn't a liquidation," said CEO Mark Shapiro. "This is about the past. This is about debt that's been around for just too long."

 

Six Flags [sIXF 0.17 -0.094 (-35.61%) ], which operates or owns 20 parks in North America, filed for Chapter 11 bankruptcy protection in the early hours of Saturday morning. The company was saddled with a $2.4 billion debt load and faced a looming cash $300 million payment to preferred stock holders in August.

 

The company tried to convince lenders to swap debt for equity in the last two months, but abandoned the measure after the measure drew little interest.

 

Common shareholders, as well as most bondholders, will likely be "heavily diluted" due to the Chapter 11 filing, Shapiro said in the interview.

 

In its bankruptcy filing, the New York-based company said its restructuring plan will result in the deleveraging of its balance sheet by about $1.8 billion. The plan also calls for the elimination of more than $300 million in preferred stock obligations.

 

The filing will likely wipe out the 6 percent stake held by Daniel Snyder, owner of the Washington Redskins football team who took control of the company in a proxy battle in 2005.

 

Other equity stakeholders who will be affected include Bill Gates' fund Cascade Investment LLC, which has about an 11 percent stake in the company.

 

Still, Shapiro said Snyder will continue his duties as chairman of the board, a position he took on in December 2005.

 

The chief executive also said he did not expect the bankruptcy filing to hurt the company's summer revenue because the company has built a reputation for its safety standards.

 

http://www.cnbc.com//id/31366246

[monsterfan99]

^ Will be interesting if they do keep all parks or how long they wait to sell of.

 

Interesting they will keep Snyder on the board after all of this but makes seance.

 

The last line is a great move by Shapiro. He knows who he is talking to with this story, families who value safety over everything. Kudos to him.

[CHILLERLC1]

I'm glad they beat Cedar Fair to the chase. I was waiting for the US Auto companies to start off the bankruptcy announcements and then down the line we went.

[fisher1095]

I'm glad they beat Cedar Fair to the chase. I was waiting for the US Auto companies to start off the bankruptcy announcements and then down the line we went.

 

Yeah, but Cedar Fair, Disney, and Anheuser-Busch are a long ways away from bankruptcy... the only reason SF is in this mess is because they spent too much money on adding roller coaster and now they can't finish paying them off... it's a loan thing.

[Jew]

You'll have to forgive me for being skeptical of a company whose leader blatantly misled employees with the "we made $275 million..." statement in his open letter.

 

Which any otehr leader would do too. He has to throw some sunshine up everyone's a$$es, otherwise they'd have even more issues of people ditching left and right. Not that it won't happen, but you can't go promoting doom and gloom, it won't get you anywhere.

 

I'm just getting tired of seeing the SF hating from the same people over and over. I don't care fro USH, but I'm not bashing them to know end every chance I get. You obviously didn't have a good experience at SF. Let it go.

 

My bad experience working at SFMM has nothing to do with the facts about Six Flags accounting practices leaving lots of "wiggle room" to improve the numbers.

 

Reducing their net loss to "only" $134 million is a sign things are possibly going to get better...But even after restructuring, if they continue to lose money while touting a nice EBITDA, history has shown companies who follow that pattern are destined to die.

[netdvn]

^^ Yes, but CF is in debt, AB won't operate theme parks anymore, and Disney wouldn't buy a SF park in a million years.

[PeoplemoverMatt]

I think we all need to wait and see what exactly happens with this bankruptcy before we act like we really know what's in SF's future. It's clear what the management is trying to do with this, and where their intentions are for the future.

 

That said, this debt needs to be dealt with, and I think we can all hope that this finally solves the debt problem. If the debt problem is eliminated once and for all, based on what's happened in the past 3 or so years leading up to today, I think you'll see a rather successful Six Flags in the years to come.

[Jew]

Here's something I am interested in hearing: What is their plan for the remaining $600 million in debt that remains?

[Jerrykoala2112]

That can be taken care of in 5 years or less. Considering last year was their best year yet with making 275 million. That 600 million will go bye-bye pretty quick. Considering how many more people are going to Six Flags due to lower prices. SFGAM has more people this year that it did at the same time last year. I am sure it is like that at other SF parks.

[Jew]

^They didn't make $275 million. That was their EBITDA.

[ParkTrips]

This stock is going to be discontinued. The lenders are getting the ownership, sell whatever you guys have now before you lose EVERYTHING

 

Off to try to sell my -B for a nice loss

 

^ They didn't *actually* make that much, as Joey has pointed out over and over. They keep pushing that number saying "hey this is what we WOULD have made had we not had to pay interest, taking depreciation hits etc etc. They still had a $100M net loss last year

 

(I'll be honest, I didn't realize how bad they were fudging the numbers till I looked at the reports)

[Jew]

BTW, just to put in perspective why I think all this talk about how the company is suddenly in much better shape now that it's in chapter 11 and under new management might be overblown...

 

I happened to come across THIS article when looking up info on Six Flags and EBITDA.

 

Of interest:

 

For example, look at Premier Parks, which operates the Six Flags chain of amusement parks. Premier touts its Ebitda performance, but that masks a big part of how the company operates--and spends its money. Premier argues that depreciation for big-ticket items like roller coasters should be ignored because rides have a long life. Critics, however, say that the amusement industry has to spend as much as 50% of its Ebitda just to keep its rides and attractions current. Those expenses are not optional--let the rides get a little rusty, and ticket sales start to trail off. That means depreciation associated with the costs of maintaining rides (or buying new ones) should really be viewed as an everyday expense. It also means investors in those companies should have strong stomachs. Premier's CFO did not respond to requests for comment.

 

So it looks like the new management is taking a page right out of the old managements playbook....

[terminatorschaffer]

^That's a great article and I appreciate your hard nosed approach to explaining what's going on with Six Flags. The article explains a lot of the problems with not only companies like Premier, but with much of the US economy as a whole. A good number of people that work for these companies know what's going on, but they use the law to their advantage by using terms like EBITDA to appear as if they're rich. What it comes down to is you gotta know your facts, and based on how things have been occurring lately, its seems like a lot of people these days don't.

 

GAAP is the Generally Accepted Accounting Principles, and it explains why the company that runs Six Flags has been digging itself into a hole for years.

 

Coasters are basically so much of an investment that most parks never pay them off right away, and when you account for daily maintenance on a coaster that you're paying off with interest, the profit margin from the coaster isn'tthat large. When parks aren't profitable, the bills for the coasters keep coming, and quickly they're owing for a coaster they can continue to run to bring in guests, but are annually (or monthly) falling behind on financially.

 

Six Flags is improving - internally - by trying to change its lackluster image through its employees. They bring in large amounts of guests yearly, and if they keep it up the numbers will keep rising. The hardest part of running a company is getting it over that "ghetto" hump to the "luxury" hump, because once you're sailing smooth in the the theme park industry, it gets easier to make more money. Walt Disney proved it.

[PeoplemoverMatt]

Except EBITDA has been used by many companies for decades. There's nothing illegitimate about its use as long as the numbers are not being manipulated. How use of EBITDA is proof of anything shoddy is a real stretch IMO, especially when you're only touting simply its use, not its misuse, or shenanigans involved in its calculation, as some form of proof of false advertising.

 

So EBITDA is not a GAAP method. So what? This letter isn't part of Six Flags' Annual Report, and it's not part of their official financial statements. They've never once stated that $275M was their net profit. Shapiro claimed they made $275M, and that's a factual statement of the amount of earnings (the "E" of EBITDA) before the ITDA part of EBITDA.

 

If you had some case for manipulation of numbers, that'd be one thing, but a simple use of EBITDA is proof of zero, especially with every indicator being that SFMM, at least, is well on its way to a significant turnaround.

 

That's the biggest difference between that letter, and how Premier used to use EBITDA. Premier was in total denial, while Shapiro is presenting the case that the turnaround is real, and the progress is real. You can complain about EBITDA and continue to hate on Six Flags all you want, but you can not tell me that SF hasn't made huge strides forward, and is continuing to.

[Airtime&Gravity]

Here is an article on how they plan to get out of bankruptcy, and if it works out, it should hopefully help the company a lot. At the same time, I'm concerned as they are taking out a new $600 million loan, but I hope it works out in the end.

 

June 15 (Bloomberg) -- Six Flags Inc., the owner of 20 theme parks that hasn’t posted an annual profit since 1998, is seeking a $750 million credit facility as part of a reorganization plan under bankruptcy protection.

 

The new capital structure would include a $600 million term loan and a $150 million revolving credit line, as well as new common stock and options, the New York-based company said today in a regulatory filing.

 

Six Flags filed a Chapter 11 petition in U.S. Bankruptcy Court in Wilmington, Delaware, on June 13, listing assets of $3 billion and debt of $2.4 billion as of Dec. 31. The company said today it plans to use cash collateral from lenders led by JPMorgan Chase & Co to finance operations while it seeks court approval for a prearranged reorganization plan to cut its debt by about $1.8 billion and eliminate more than $300 million of preferred stock obligations. The reorganization plan has yet to be filed with the court.

 

“This proposed reorganization plan is likely to be met with resistance by the unsecured lenders,” CreditSights Inc. analysts Chris Snow and Frank Lee wrote in a report today, citing an equity offer of 10 percent in the reorganized company. That compares with an 85 percent stake bondholders were previously offered for a debt-for-equity exchange, the analysts wrote.

 

The new term loans would have an interest rate seven percentage points more than the London interbank offered rate, with a 2.5 percent floor, according to the filing. Six Flags said the five-year credit line would be backed by “substantially all assets.” The company would have the option of buying back the loans at 103 cents on the dollar in their first year, 101.5 cents in the second year and on par thereafter.

 

Six Flags didn’t disclose financing costs for the four-year revolver, which also would be secured by its assets.

 

‘Revival’ Path

 

As part of its Chapter 11 financing, Six Flags is seeking to renew or extend the maturities of existing letters of credit, subject to lender approval, and to get a so-called debtor-in- possession letter of credit facility to finance requirements.

 

“This action to clean up the balance sheet paves the way for a full revival of the company,” Chief Executive Officer Mark Shapiro said in a June 13 statement. “This process is strictly a financial restructuring of our debt.”

 

Click Me

 

In other news, the bankruptcy won't affect Six Flags Dubai.

 

DUBAI, June 15 (Reuters) - Tatweer, a leisure developer owned by Dubai's ruler, said on Monday the bankruptcy of its partner Six Flags (SIXF.OB), one of the world's largest theme park operators, will not delay a multi-billion dirham project.

 

New York-based Six Flags, which operates or owns 20 parks in North America, said on Saturday it filed for Chapter 11 bankruptcy protection as it struggled with a $2.4 billion debt burden and faced a looming cash payment of $300 million.

 

"The chapter 11 announcement from Six Flags has no impact on our theme park plans or their openings," Tatweer said in an e-mailed reply to Reuters questions.

 

"We have nothing to add and will not make any announcement regarding our development plans in the context of Six Flag's financial restructuring."

 

The Dubai firm did not make clear if Six Flags would still be involved in its project.

 

Tatweer, which is building at least seven theme parks in the Gulf Arab emirate, signed in May last year an agreement with Six Flags to develop a theme park in Dubai and develop other projects in the Arab region.

 

The first phase of the Dubai park was projected to be ready in 2011, Tatweer said last May. The park will stretch over five-million square feet, will feature 30 rides and will welcome as many as 3 million visitors a year.

 

Hundreds of billions of dollars of property and construction projects have been cancelled in Dubai and firms have laid off thousands of employees as the financial crisis hits the United Arab Emirate's trade and tourism hub.

 

Another Link

[EnglndPatriots6]

i seriously think SF business dept. is retarded or something. they just decided out of the blue to build a new park in dubai, and they are supposed to be getting a new coaster next year for magic mountain from what ive heard. they really arent the smartest company financial wise. as long as kentucky kingdom doesnt close ill be happy tho lol. but i demand they add more rides to the park

[astroworldfan1]

as long as kentucky kingdom doesnt close ill be happy tho lol. but i demand they add more rides to the park

 

You want SF to add rides to add rides to SFKK. But, if they add rides, SF will add to their debt...

 

-Tatum

[Airtime&Gravity]

i seriously think SF business dept. is retarded or something. they just decided out of the blue to build a new park in dubai, and they are supposed to be getting a new coaster next year for magic mountain from what ive heard. they really arent the smartest company financial wise. as long as kentucky kingdom doesnt close ill be happy tho lol. but i demand they add more rides to the park

 

1. Learn grammar

2. Six Flags is Not building the park in Dubai. They are licensing the name to Tatweer who who actually build the park. Just like how Disney doesn't own Tokyo Disneyland. Also, they didn't just decide to do it out of the blue as these parks take years to plan and build.

3. Cedar Fair has a lot of debt, and if Six Flags can reduce their debt to $600 million, Cedar Fair will have a lot more debt. Using you're logic, Cedar Fair shouldn't be adding any rides either.

4. You complain about other parks receiving additions, and then as Astroworldfan said, you want Kentucky Kingdom to get rides. However you don't want the cost to be added to their debt.

5. Umm, the new management has been turning the company around, and bankruptcy will help with their massive debt load. If the new management continues what they are doing, hopefully they can finally be in the black.

 

Airtime-at least you don't know bout the park being built in Qatar...oops - &Gravity

[EnglndPatriots6]

as long as kentucky kingdom doesnt close ill be happy tho lol. but i demand they add more rides to the park

 

You want SF to add rides to add rides to SFKK. But, if they add rides, SF will add to their debt...

 

-Tatum

 

lol pretty much we haven't received a new ride other then a waterpark ride in the last 6 years. well i didn't know they was licensing it to that guy over there. i just saw on their site they was building it. seriously wherever u all go u get new rides we have to endure the same boring crap every year . seriously u would think the same thing if u had only KK to go to. and as far as i can tell their management hasn't been doing aything different then they always do, and my grammar is fine, thats the way we talk where im from.

[Airtime&Gravity]

^Yeah, well everywhere else, the first letter of a sentence is capitalized, "I" is used to represent yourself, and "you" is used to refer to someone else.

 

Hmm, I guess the family that I have in Kentucky must be the unique ones down there since they use the same rules relating to grammar that I listed above.

 

To the mods, sorry for being a backseat mod.

 

More news:

 

NEW YORK (AdAge.com) -- Theme-park giant Six Flags has filed for bankruptcy, a move that normally signals a cut in marketing spending. But in this case, Chapter 11 figures to be good news for Mr. Six.

 

Six Flags is doing its best to protect its image online with a PR blitz.

 

"Our biggest challenge today is that the public is more familiar with 'bankruptcy' because of AIG and Chrysler," said Mike Antinoro, exec VP-entertainment and marketing at Six Flags, adding "But you hear that word, and it's closely associated with 'closed.'" So Six Flags, which derives more than 80% of its annual revenue from late spring and summer, is buying additional interactive inventory to help spread the word that its parks are very much open for business as it restructures its $2.4 billion debt.

 

More than 'open'

"We're redirecting our message online," said Mr. Antinoro. "We're focusing on reassurance: We're not just 'open'; we have new attractions and rides in every single park, and longer hours and more operating days than ever before."

 

Mr. Antinoro declined to speak specifically about how much money Six Flags would spend to "reassure" its customers. However, another insider familiar with the company's finances said the company spends some $60 million annually on all of its marketing. Thanks to the restructuring of its debt, at least five Six Flags markets -- New York, Los Angeles, Chicago, St. Louis and Springfield, Mass. -- are slated to actually receive between 10% and 15% increases in their advertising and marketing resources, the insider said. Ogilvy North America is Six Flags' agency.

 

In the meantime, Six Flags is doing its best to protect its image online with a PR blitz. It's purchased search terms such as "Six Flags bankruptcy" at major search engines like Google and Yahoo so that an FAQ page on Six Flags site can direct them to factual information about the minimal effect on operations. And CEO Marc Shapiro spent much of his Monday afternoon answering questions at a bloggers' roundtable, fielding questions from financial and theme-park bloggers about the impact of the restructuring on new roller coasters.

 

Hiring an agent

The company has also deployed a dedicated "social-media agent" to monitor and respond to online chatter on Facebook and Twitter. "There's a great need for accurate information right now [online]," said Mr. Antinoro, adding that those who are talking about Six Flags on Facebook and Twitter are "really the most loyal and most engaged with us and our brand, even if 'loyal' doesn't mean they always agree with us or think everything we do is great."

 

In a separate interview, Mr. Shapiro, meanwhile, said he is doing his utmost to market Six Flags as a 12-month-a-year business. Six Flags, he noted, is "looking at and pursuing brand extensions" such as Six Flags Rollercoaster Cuts, a children's boutique and hair-salon offering a multi-media haircutting experience for kids, replete with roller-coaster barber chairs and big-screen TVs simulating coaster rides. Six Flags, he said, will be opening another Rollercoaster Cuts soon, at the King of Prussia mall in Pennsylvania in the next few weeks, with others to follow.

 

"It's a low-cost-of-entry business, and it serves as a marketing machine for us," said Mr. Shapiro, "The idea is to get these kids while they're young. And as we get out from under this debt, you'll see us experimenting in all sorts of marketing efforts that turn us into a 12-month [a year] business. We're just as much about the experience as the rides."

 

 

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