Six Flags Debt Restructuring--Selling Two Parks!?!

[GAcoaster]

The Associated Press has an interesting article about how Six Flags stock has been going up and up since Shapiro took control and is now working on restructuring the $2.4 Billion in debts.

 

Six Flags Shares Gain After Upgrade

Thursday January 12, 1:56 pm ET

Six Flags Shares Gain After Analyst Expresses Confidence in Company's Turnaround Potential

 

 

NEW YORK (AP) -- Shares of theme park company Six Flags Inc. gained Thursday, after an analyst expressed confidence in new Chief Executive Mark Shapiro's ability to turn around the company by selling off assets.

 

Six Flags, whose stock gained 37 percent last year, installed Shapiro as its new CEO and president in December, marking the end of a lengthy proxy fight launched by shareholder and Washington Redskins owner Dan Snyder to take control of the nation's No. 2 amusement park operator.

 

Bear Stearns analyst R. Glen Reid said that Shapiro, whom Snyder hand-picked, brings an "impressive" background as a former top executive from Walt Disney Co.'s ESPN.

 

Six Flags shares rose 58 cents, or 6.3 percent, to $9.79 in afternoon trading on the New York Stock Exchange. The stock has traded between $3.72 and $9.37 over the past 52 weeks.

 

"Count us reformed skeptics," Reid wrote in a client note earlier Thursday. "We had believed that the company could only see modest improvements given the limitations of a relatively unfavorable industry. What we had overlooked was that a change in operating performance was not nearly so important as a change in the capital structure."

 

Reid upgraded Six Flags stock to "Outperform" from "Peer Perform," and forecast a smaller 2006 loss for the company of 22 cents per share, compared with his previous loss estimate of a 42 cents per share.

 

Analysts overall have pegged Six Flags' 2006 loss at 35 cents per share, according to Thomson Financial.

 

Reid said Six Flags could quickly eliminate its debt by selling off assets including excess land, two theme parks and food equipment. Selling the company's food equipment would get Six Flags out of the business of preparing food at its parks, instead allowing it to receive a share of food profits from a third party, Reid said.

 

The analyst set a $12 year-end price target for Six Flags, saying increased sponsorship and product placement revenue would also augment the asset sales. Six Flags already is in talks with Papa John's International Inc. and Pizza Hut Inc.

 

"The goal of Six Flags is not unlike that of a typical leveraged buyout: Quickly pay down debt in order to give equity holders a greater claim on free cash flow," Reid said. "Having met with new management, we believe that meeting such a goal, through asset sales and higher ad revenue, is likely."

 

This is the MOST interesting line: "Reid said Six Flags could quickly eliminate its debt by selling off assets including excess land, two theme parks and food equipment. "

 

Let the speculation begin about WHICH two parks.

[Corkscrewed]

Would this be referring to Astroworld and New Orleans, or would this be in addition to those two?

 

That's what I wonder.

 

Altho if I had to speculate, it'd probably be two underperformers, like Elitch Gardens and, I dunno, Kentucky Kingdom? I think Fiesta Texas has also been a rumored name recently.

[Astat]

I think Six Flags Mexico could be one they'd sell, over the past couple years the company has really withdrawn from the market outside the US. As for the other one, I dunno, Frontier City or Enchanted Village? I just have a feeling it'd be one of the smaller parks they own that doesn't carry the Six Flags name.

[alpengeist04]

Would they be able to eliminate their debt with two small parks being sold off, along with land and equipment?

 

Whatever they do, I hope they don't sell any land by Great Adventure.

[Astat]

They won't sell Great Adventure, that's probably their second most important park behind Magic Mountain. And you'd be surprised how much money 2 small parks are worth. I don't think the plans are really to completely eliminate the debt, but get it to an acceptable level. Any major company for the most part has some debt, and even if they got rid of it completely, they'd quickly go back into debt again just from the amount of money it takes to keep the parks running.

[QuakerOaties]

^^ I think you better start hoping realllllly hard.

 

Mark "I can see a portion of gadv's land being sold" Luskus

[niiicolaaah]

They should sell SFDL!!!

 

Maybe if someone (NOT another chain) bought SFDL, it would actually get the TLC it needs.

[Nrthwnd]

I think, the two parks are a semi-done deal, within the publicity release.

 

That being New Orleans, and Astroworld.

 

IMhO

[ParkTrips]

Whatever they do, I hope they don't sell any land by Great Adventure.

 

Considering Great Adventure's abundance of land was already mentioned in one of the articles (if my memory serves correctly) I'd imagine a good chunk may be chopped off.

 

I don't want to make an entirely new thread, but here is another SFI article

[rjholla2003]

They won't sell Great Adventure, that's probably their second most important park behind Magic Mountain. And you'd be surprised how much money 2 small parks are worth. I don't think the plans are really to completely eliminate the debt, but get it to an acceptable level. Any major company for the most part has some debt, and even if they got rid of it completely, they'd quickly go back into debt again just from the amount of money it takes to keep the parks running.

 

Try most important. Magic Mountain has been behind Great Adventure for years now.

 

Someone on one of the forums I visit posted a link that showed all of the land that SFI owns in New Jersey. They have many plots of land that are not attached to Great Adventure at all. Some of them are vancant lots, others are rented out for cell phone tower use. Since they are not physically attached to the park, I can see those being sold. I hope that they do not sell any land that is actually attached to Great Adventure though since it holds near limitless possibilities.

 

As for the two parks, I can see SFNO being sold. They have to rebuild it first though since that's the agreement that they reportedly have with the city, but I don't see it being rebuilt to the same status that it was, and I don't see it remaining an SFI park. As for the other one, maybe they cut the lease with SFMW, or get rid of Elich Gardens since I hear that's really doing nothing. Maybe then might go completely domestic and dump La Ronde and SFM. That's all of the senarios that I really see.

[Nrthwnd]

Maybe then might go completely domestic and dump La Ronde and SFM. That's all of the senarios that I really see.

 

Hmmm. That sounds like a possible scenario.

 

[SharkTums]

Here's the problem with selling SFNO...WHO WOULD BUY IT?!?! Forget even the park, I don't think that land is very attractive right now. There are so many areas in New Orleans up for sale, I can't imagine them getting a very good price for it.

[pvcoasterguy]

Six Flags isn't going to prepare its own food? I could see this as rasing the prices even more! I want my funnel cake sundaes from Great America, not something I could get at the store like Ben & Jerry's!

[Bob O]

I dont think selling used kitchen equipment and 2 small parks will net the company the billions/hundreds of millions it needs to get out of debt.

Now if they sold a park like SFGAM and another major park that might get them alot of money but small parks wont be that attractive for another company of offer SF top dollar.

[robbalvey]

Elissa's right about SFNO. IMO, they might "close" SFNO (just an opinion) but I don't think that park would get much if it were sold. The way I read the article, I don't think they are taking about either SFAW or SFNO.

 

I would say two international parks could be an option, or possibly two smaller, profitable, but non-flagship parks could be another. Elitch's and Wild Waves come to mind.

 

Again, this is all just me totally speculating and putting all of about 5 minutes of thought after reading that article!

 

--Robb

[alpengeist04]

They won't sell Great Adventure, that's probably their second most important park behind Magic Mountain.

 

I was worried about the land by SF Gr.Adv., not the park itself. It would be a foolish move to sell a profitable park like Great Adventure.

[ParkTrips]

I think New Orleans' land could be sold... there will be a land-grab and a 140 acre plot would make a nice subdivision for the nearby country club.

 

Problem is that most of the land isn't Six Flags' to be selling...

 

More articles:

http://biz.yahoo.com/bw/060112/20060112005813.html?.v=1

http://biz.yahoo.com/ap/060112/six_flags_marketing.html?.v=1

[calcajun]

Six flags does not own the land that SFNO sits on.

 

Where did that info come from anyway to sell astro and sfno?

Astroworld was simply closed not sold.

 

Elissa is also correct that no one in thier right mind would buy SFNO. LOL

Just like i tell you i got this car from the nineth ward, it was underwater for a month, want to by it?

Hell no you wouldn't buy it!

 

Really though, where the hell did you hear that stupid RUMOR that SF was selling Astroworld and SFNO? Thats so funny!

[Twister II]

I don't think Elitch's. Reason: Elitch's is in the mid-west part of the US. It is pretty much the only park for hundreds of miles that is owned by Six Flags. I think Elitch's is just to help and get the word out about Six Flags parks. For example, if someone living in Denver knows about SFEG (which its kinda hard not to), and is traveling to Georgia, that there is SFOG.

 

My guess would be:

Six Flags Water World (even tho it just opened)

Enchanted Village

Six Flags Mexico (all Europe parks are gone, now Mexico's could be next)

American Adventures

The Great Escape

La Ronde (again with foreign parks)

 

but also, could the article also mean water parks? Even though it seems very unlikely. Like Six Flags Splashtown, Hurricane Harbor, etc.

[arson]

Odd, a friend and I were having a conversation about this the other day...

 

You know, I could see Herschend Family Entertainment (who operates Dollywood, Silver Dollar City, ect) come in and swoop up SF Fiesta Texas for the right price. Yeah, SF would loose another Texas park, but it might do them well to sell that, especially since Herschend seems to be down with the whole family entertainment thing.

 

I could see, at the end of the 2006 season, the removal of Scream and Poltergiest, headed for other parks (SFEG or MV, maybe?), and then the sale of the park to Herschend.

 

I could also see Six Flags Mexico go, one of the smaller parks, or even some of the water park operations being outsourced like the food operations, but I think they'd be wise to hang on to La Ronde, just because they're pouring money into it. If you look at Astroworld, I think it's clear that the least-desired parks feed from the bottom, and La Ronde seems to be working it's way up the chain with Goliath, the way SFNE did a few years ago with Superman: RoS.

 

But I think Great Adventure and all the other top-tier parks are OK. Family friendly or not, these parks make money for them.

[Carnage]

^ I think I remember reading something about how Snyder was opposed to the removal of Astroworld, and that SF Fiesta Texas was going to be a property to focus on.

 

So I'd be surprised to see it go.

[Movieguy]

I hope to god that SFDL gets sold as well...I've had it up to here with Six Flags letting this park go to rot. At least when the defunct Premier Parks INC owned DL, they had the friggin decency to at least give the place a couple of Veclonas, and the nightmare (Which is now in the Great Escape) which is more than Six Flags has EVER done.

[Guy T. Koepp]

Here's an odd thought. What if he were to sell off his two highest tier parks. He would get premium dollar return. And not have to worry about re-habbing them. I don't know about Gadv. But, MM is going to take a lot of work and money to get it to his standards of a family park. IMHO if he were to dump these parks, CF would probably snatch them up pretty quick as they are thrill parks and thats what CF sells. He could then use the S***load of cash to buy down debt as well as influx all the rest of the chain.

 

However, I do think they will try to sell Mexico. The other park is a toss up. Canada is realy just another American state anyway and I think the park is quite profitable, so under the circumstances it may not be on the chopping block.

 

Astroworld is already a given, they are subdividing the land and selling it for top dollar. Question is, Is that one of the two?

 

Poor NO. Why would they spend millions of dollars to re-hab it only to turn around and lose millions on it's sale? Besides, isn't the land leased? They would gain less than nothing. I think their only options there are to re-hab the park and open it. Or write the whole thing off as an income tax deduction and collect what little they can from insurance.

 

Guy "But what do I know?" Koepp

[arson]

Here's an odd thought. What if he were to sell off his two highest tier parks. He would get premium dollar return. And not have to worry about re-habbing them. I don't know about Gadv. But, MM is going to take a lot of work and money to get it to his standards of a family park. IMHO if he were to dump these parks, CF would probably snatch them up pretty quick as they are thrill parks and thats what CF sells. He could then use the S***load of cash to buy down debt as well as influx all the rest of the chain.

 

Guy "But what do I know?" Koepp

 

I don't think Cedar Fair has the money or time to take SFMM under it's crowded wing with Geauga Lake (a park which will take at least 10 to 15 years or more to start making a profit). Cedar Fair doesn't move fast enough, and is very conservative with it's aquisitions.

 

That, and I don't see SFI selling off the four parks getting new coasters. I could see them selling off:

Six Flags Darien Lake

Six Flags St. Louis (I'm on the fence about this)

Six Flags Eltich

Six Flags Waterworld

Six Flags Mexico

Frontier City

White Water Bay

Wyandot Lake

[astroworldfan]

Six flags does not own the land that SFNO sits on.

 

Where did that info come from anyway to sell astro and sfno?

Astroworld was simply closed not sold.

 

Elissa is also correct that no one in thier right mind would buy SFNO. LOL

Just like i tell you i got this car from the nineth ward, it was underwater for a month, want to by it?

Hell no you wouldn't buy it!

 

Really though, where the hell did you hear that stupid RUMOR that SF was selling Astroworld and SFNO? Thats so funny!

 

Whoa!!! Much too my despair, Astroworld is a done deal. I was at the auction on Sunday.

 

To clear up a few things. I talked to SFAW employee on Sunday; here is what I learned

 

We all know six flags has tons of debt. OK, SFAW was the only park that was wholly owned by SF that did not have some sort of agreement preventing it from being sold. Apparently the the debt principle is due from Premier Parks' purchase of SF from Time Warner. And its due in February.

 

Sad reality is Astroworld is supposed to be turned over to Land Developer on Jan 31.

 

We all heard that the R/E is hot in Houston where SFAW is. Thats true, but the 'real' story was about timing and availability. SFAW was the most 'liquid' asset available. And they need $$$ now. The parking dispute thing was smoke and mirrors. SFAW has rights/ownership to all the land in its block and several other pieces very near. Parking wouldn't have been an issue. But it was enough to tell public/stockholders..."we need to sell it."

 

My understanding is there is a long term agreement with SFNO and city of NO... so i think SF is stuck there. There is also some sort of agreement that SFFT cannot be sold for several more years. (I will try to find out more about these agreement that are in place)

 

Hope this helps

 

And last but not least, why is everybody trying to take away my friggin' parks? First is SFAW, which is unfortunately true, and then SFFT. LEAVE TEXAS ALONE!!! We have suffered enough!