Money Matters, Simplified.
Six Flags Inc. files for bankruptcy protection
by Jamie Anderson - June 14, 2009 - comments
Six Flags sold several properties last year to raise capital but could not help seek Chapter 11 protection due to huge debt burden
New York, June 14: Owner of 20 theme parks, Six Flags Inc. (Pink Sheets: SIXF), sought bankruptcy protection Saturday. The amusement park operator, however, intends to keep its parks open, at least for the time being.
The filing represents a failure for Washington Redskins owner Dan Snyder, who took charge of Six Flag more than three and a half years ago in a bitter boardroom battle.
The management team he appointed to stage a turnaround in the fortunes of the company has, however, let him down.
Huge debt
The Midtown, Manhattan based company is burdened with an overall debt of $2.4 billion. Nearly $288 million of this debt is due to preferred stockholders in August this year. A payment of $31 million in unpaid dividends also stands in the book of accounts.
Mark Shapiro, Six Flags' chief executive officer, disclosed, "The current management team inherited a $2.4 billion debt load that cannot be sustained, particularly in these challenging financial markets."
He added that the bankruptcy protection was being sought primarily to clean up the balance sheet. “We are cleaning up the past and positioning the company for future growth,” he said.
The recession factor
Founded in 1961 in Texas, Six Flags is one of the world's largest chains of amusement parks and theme parks. It, too, like many other companies, has had to bear the brunt of the ongoing recession.
The company, which has operations in Chicago, San Antonio and Mexico City, had to suffer a first quarter revenue fall of 24 percent. Six Flags had assets of $3 billion and liabilities of $3.4 billion as on March 31, 2009.
With its inability to outrun the slumping economy, Six Flags has decided to tread the path of bankruptcy, but with a prearranged reorganization plan. It has already finalized a pact with the senior secured lenders that would enable it to convert $1.8 billion of debt into equity.