Six Flags Files for Chapter 11

[Mike13]

Six Flags Inc., the world's largest regional amusement-park company, filed for bankruptcy protection early Saturday.

 

The theme-park company, shouldering more than $2 billion in debt, had been racing to restructure outside of court, negotiating with lenders, selling parks and laying off staff. But it couldn't outrun the deteriorating economy and a looming $288 million payment due preferred shareholders this August, along with $31 million in unpaid dividends.

 

Six Flags, whose theme parks attract more than 25 million visitors a year, said it filed Chapter 11 with a prearranged reorganization plan that garnered unanimous approval from its lenders' steering committee. The plan would deleverage Six Flags' balance sheet by about $1.8 billion and eliminate more than $300 million in preferred stock obligations, the company said.

 

Low consumer confidence kept attendance down at Six Flags' 20 parks, which dot several cities across North America, including Chicago, San Antonio and Mexico City. Revenue fell and the company delayed certain debt payments.

 

Six Flags' Chapter 11 filing marks a setback for investor Daniel Snyder, the Washington Redskins football team owner who took control of the theme-park company in a contentious proxy fight in 2005 and installed his own management team. The bankruptcy would likely wipe out Mr. Snyder's stake.

 

In a statement on the filing, Six Flags didn't address Mr. Snyder's stake. A Six Flags spokeswoman didn't immediately return a call seeking comment.

 

In the midst of his battle to wrest control of the company, Mr. Snyder wrote a letter to Six Flags stockholders saying they "would have been better off hiding their money under a mattress" than investing in the company under its prior management.

 

"The current management team inherited a $2.4 billion debt load that cannot be sustained, particularly in these challenging financial markets," said Mark Shapiro, Six Flags' chief executive, in a statement. He said operations of the company's parks would be unaffected by the filing and that Chapter 11 protection was sought solely to "clean up the balance sheet."

 

Also losing out on Six Flags' financial rollercoaster: Microsoft Corp. founder Bill Gates, whose Cascade Investment LLC owned about 10.2 million shares.

 

Six Flags failed to get last-minute concessions from lenders out of court. A deadline for debt holders to swap certain notes for equity expired Friday night. The park operator had extended that deadline by more than two weeks after falling well short of a 95% targeted acceptance rate.

 

Mr. Snyder's team, led by Mr. Shapiro, a former ESPN executive, had made some progress of late. Six Flags sold 10 parks and laid off about 300 workers. It tried to make its parks more "family friendly," banning smoking in most areas.

 

Last year, Six Flags brought in more cash than it spent for the first time. The company's losses narrowed in 2008 to $112.9 million, about half those of a year earlier. Sales nudge 5% higher to about $1.02 billion.

 

But last summer's record fuel prices, plunging consumer confidence and deteriorating credit markets weighed on Six Flags' balance sheet. The company lost even more money when the recent swine flu outbreak forced a temporary closure of its park in Mexico City.

 

A few months ago, Six Flags hired law firm Paul Hastings Janofsky & Walker LLP to prepare for a bankruptcy filing. It also hired Houlihan Lokey Howard & Zukin to negotiate with creditors.

 

 

 

 

[Railer]

Six Flags today announced it is Filing Chapter 11 Bankruptcy Protection.PARK OPERATIONS WILL CONTINUE AS PLANNED. I am posting this as we are actually heading out to the Park, just wanted to get it out there over here. I will put up the full article later today, and the E-Mail sent to all Passholder's from Mark Kane assureing that everything will be O.K. with our fine Park. I guess today I will spend a few extra Dollar's in the park, every little bit can help. Everyone should do the same. R

[BMax]

do you think they will liquidate any of the smaller parks? And if they do would we maybe receive some of the rides?

[DarkKnight]

oh my gosh!

[GAcoaster]

This means they will FINALLY be out from under their debts. This is good news since all the creditors are on board with it now, and this is a structured bankruptcy which they will be out of VERY quickly. In the mean time it's business as usual.

[Railer]

Here is the email that went out to season pass holders this morning.

 

Dear Season Pass Holder,

 

You may have read about how Six Flags, Inc. is restructuring its debt. We want you to know that Great Adventure will be here for your family, this summer and for years to come.

 

Great Adventure will be open all season long.

From hot summer concerts to Fright Fest, Great Adventure will be open for business, the business of fun. As always, we continue to offer one of the best values in family entertainment, just a car ride away.

 

Expect great things throughout 2009.

We've introduced the all-new Bizarro coaster. We're launching new shows like Saturday Night Lights, the award-winning, internationally acclaimed fireworks spectacular. We're hiring staff, adding days, expanding hours, giving you and your family more dining options, and bringing you top music acts like LeAnn Rimes, The Veronicas, and Flo Rida.

 

If you would like more information, we invite you to read our RESTRUCTURING FAQ.

 

Thank you for being a Six Flags Great Adventure Season Pass holder. See you at the park.

 

Sincerely,

Mark A. Kane

 

President

[GAcoaster]

This was forwarded to us by the the park's Public Relations team:

 

June 13, 2009

 

Six Flags, Inc. (“Six Flags”)

 

To All Six Flags Employees:

 

As employees of Six Flags, your talents and dedication have been the most critical factor in the success of our business. Thanks to your efforts, Six Flags has achieved tremendous operational milestones and we now stand ready to take the next necessary step to improve our overall financial health and position the company for continued growth and opportunity.

 

The turnaround strategy we began implementing in the spring of 2006 has come to fruition. Together, we cleaned-up our parks, enhanced the overall guest experience, repositioned the Six Flags brand by diversifying our product offering, and the company became free cash flow positive for the first time in its history. We delivered on our agenda and as a result, rebuilt the faith, trust and overall relationship with the consumer.

 

Pride in our company across the workforce has also been restored.

 

Unfortunately, however, as you know, we inherited an unsustainable $2.4 billion debt load from the previous management team. To put it into context, even if you have a record year and make approximately $275 million as we did last year, when you have to pay out approximately $175 million in interest expense on your debt and $100MM in park improvements to maintain and keep up with the business, that's a balancing act you just can't risk year in and year out. Furthermore, we have over $400 million of debt coming due within the next 12 months that cannot be refinanced in these financial markets.

 

That's our situation in a nutshell.

 

Today, we are moving to rectify our balance sheet once and for all. This morning, Six Flags announced it is seeking expedited approval from the Bankruptcy Court for the District of Delaware of its pre-negotiated plan of reorganization under Chapter 11 of the United States Bankruptcy Code. The plan has unanimous support of the lenders’ Steering Committee and the Administrative Agent for the Company’s $1.1 billion senior secured credit facility. This support is evidenced by executed lock-up agreements.

 

We expect to proceed quickly and we intend to emerge from these proceedings in the coming months with a significantly improved balance sheet and greater operational and financial flexibility.

 

Our brand and our operations are on solid ground. This process is strictly a financial restructuring of our debt and that’s how you should view it and speak about it.

 

No one should be confused about what a bankruptcy process means for Six Flags. Following a record year of performance in 2008, which completed the three-year turnaround of our system-wide park operation, this action to clean up the balance sheet paves the way for a full revival of the company. Believe me when I say we will emerge from this process stronger and more competitive than ever.

 

This was a difficult decision for management and the Board of Directors, but it is the right thing to do for Six Flags. It is critical that you - and our guests, suppliers, families, and friends - know that every park is open and operating today and will continue with normal operations this summer and for years to come. This restructuring process is strictly a “back of the house” effort to address and ensure the longstanding financial stability of Six Flags.

 

To address what must be foremost on your mind: ALL OF OUR EMPLOYEES WILL CONTINUE TO BE PAID IN FULL AND ON TIME. YOUR BENEFITS WILL CONTINUE. NO REDUCTION IN WORK FORCE WILL ARISE OUT OF THIS FILING.

 

Our suppliers and other partners will continue to be paid for their goods and services so our product and entertainment offerings will not suffer.

 

As the face of Six Flags, none of us can allow the distraction of this parent company issue to tarnish what we all have worked so hard to accomplish these past three years. That said, it is up to you to ensure that our guests continue to enjoy the high quality entertainment experience they have come to expect from us. We know from years of experience and research that the single most important factor in providing our guests a memorable experience is their positive interaction with our employees. Particularly in this difficult economic environment, all of us at Six Flags must re-dedicate ourselves to providing the friendly, clean, fast and safe service our customers now expect, and deserve. More than ever, consumers are gravitating toward experiences they know and trust. Six Flags has been a favorite family destination for almost a half century. Our reorganization will ensure that our parks will continue to entertain millions of guests for another 50 years.

 

From time to time, you will receive notices from the Bankruptcy Court regarding the progress of our Chapter 11 proceedings. Some of these notices will be for informational purposes only; some may require a response from you. These notices are a routine part of the legal process behind the restructuring. We will make every effort to alert you in advance regarding such notices. As of 7:00 a.m. Eastern Time, a “Frequently Asked Questions” section regarding this process will be posted for your benefit on our website at www.sixflags.com/employees. If you or your family has further questions, please call our company hotline at (866) 715-8810.

 

With your continued efforts, these proceedings will allow us to emerge as a healthier, more dynamic company with a whole new world of opportunities. When this financial procedure is completed, Six Flags will have shed the greater part of a burden that threatened to undermine all our success. So, keep working hard and stay focused. At the same time, spread the word about what we've accomplished, what we're now doing and why. As an ambassador of the company, educate anyone and everyone around you. Feel free to share this note with your own social network – family, friends, neighbors, blogs, etc. Get the word out. People want to be informed.

 

As such, I will continue to relay pertinent information as it becomes available. In the meantime, I'd like to thank you for your continued support as we re-build the road to future success.

 

Sincerely,

 

Mark Shapiro

[29yrswithaGApass]

Wishing Six Flags the best for years to come!

[Mike13]

^I second that !Hopefully now after this restructuring and the only 600 Million in debt they can finally start chipping away at that debt and then start adding some better rides again.(Not saying huge B&M or Intamins since those are what got them in this mess in the first place)but like a Euro-Fighter or Mack Launched coaster.

 

But I know we will come out betta than ever!

[The Master]

 

Six Flags files for chapter 11 on 6ABC

Edited June 15, 2009 by The Master

[GAcoaster]

From Reuters:

 

Six Flags won't sell parks, cut workers: CNBC

Mon Jun 15, 2009 7:16am EDT

 

NEW YORK (Reuters) - Six Flags Inc (SIXF.OB: Quote, Profile, Research, Stock Buzz) 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 on 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, 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.

[GAcoaster]

Some interesting facts from the bankruptcy filing (from the Wall Street Journal):

 

Six Things to Know About the Six Flags Bankruptcy

 

Here are six things you should know about Six Flags, one of the world’s largest amusement-park chains, as gleaned from its Chapter 11 bankruptcy court filing:

 

1) Assets: 20 theme parks, including four in California, three in Texas, one in Canada and one in Mexico. Six Flags owns 800 rides, including 120 roller coasters and also holds the licenses to use Scooby Doo, Yogi Bear, Bugs Bunny and Yosemite Sam for marketing purposes.

 

2) Debt: Total of $2.4 billion and preferred equity payments, including $300 million due in August. Six Flags had been trying to restructure its debt starting in Oct. 2008, but not enough lenders agreed to convert their debt to equity before a June 12 deadline.

 

3) Employees: 2,040 full time workers and 28,500 seasonal employees. About 16% of the work force is unionized.

 

4) Revenue: In 2008, revenue increased to $1.02 billion, up 5% from the previous year, while attendance was up 2% to 25.3 million. More than 80% of Six Flags revenue is generated in the second and third quarters, during the warmer spring and summer months.

 

5) Biggest creditors: Silver Point Capital, Avenue Investments and Fidelity Management & Research Co.

 

6) Unsecured creditors: Includes group of bond holders headed by Bank of New York, Mellon, which are owed a total of $900 million; Alex in Wonderland, a Burbank, Ca., special-effects company specializing in “casualty and blood gags” including severed heads and feet. Six Flags owes it $75,000.

 

Also, the CFO has stated they expect to be out of bankruptcy in 4-6 months. It will be really good to have this all behind them!