CFO: Six Flags bankruptcy may take 4-6 months
Six Flags Inc.'s Chapter 11 reorganization may take four to six months to complete, the amusement-park chain's chief financial officer said today.
"Our hope is that, and we believe it's feasible, that we'd be done with the process before the end of the calendar year," CFO Jeff Speed said in an interview, citing advice from the company's legal and financial advisers.
The New York-based owner of 20 theme parks filed a 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. Six Flags is seeking court approval of a prearranged reorganization plan to cut its debt by about $1.8 billion and to eliminate more than $300 million in preferred stock obligations, the company said in a statement.
Emerging from bankruptcy before the end of the year is an "aggressive" estimate, said Joseph Stauff, an analyst at CRT Capital Group LLC in Stamford, Connecticut.
"Given the probability that this could be a contentious battle, that always alludes to a much longer-than-expected bankruptcy period," Stauff said in an interview today. "The issue is they have to prove to the bankruptcy court that the plan currently contemplated is fair."
Under the proposed plan, senior secured lenders would receive about 90 percent of the stock in the reorganized company, while unsecured bondholders would get about 10 percent, CreditSights Inc. analysts Chris Snow and Frank Lee wrote in a report today. Six Flags offered unsecured bondholders 85 percent in a recent debt-for-equity exchange, they said.
'Displeased'
"Unsecured bondholders are likely to be displeased with the current terms being considered," the analysts wrote.
Shareholders are likely to receive nothing, Fitch Ratings analyst Mike Simonton said today.
"In bankruptcy, the prior equity typically gets canceled," Chicago-based Simonton said. "It gets zero value."
Six Flags's largest shareholders include Chairman Daniel Snyder, owner of the National Football League's Washington Redskins. He owned 5.4 percent of Six Flags, or 5.28 million shares, as of October 2007, according to data compiled by Bloomberg.
Looney Tunes
Snyder won a proxy fight in late 2005, ousted then-Chief Executive Officer Kieran Burke and appointed himself, now-CEO Mark Shapiro and director Dwight Schar to the board. Under Shapiro, the company has sought to clean up the parks and add family-focused attractions, such as Thomas the Tank Engine and Looney Tunes.
"Mark Shapiro and his team have exceeded every operational goal we set out three years ago and Six Flags is on the path to maintaining its growth and continuing to satisfy millions of guests," Snyder said in an e-mailed statement. "The harsh realities of today's credit markets, and the onerous debt we inherited from previous management, have brought us to this place, but I'm confident Six Flags will emerge as a stronger corporation."
The company plans to increase advertising to reassure visitors that Six Flags parks are open for business, CFO Speed said today. Park-goers won't notice any difference in services and product offerings, he said.
Six Flags shares have plummeted 98 percent of their value since Nov. 22, 2005, when Snyder won the proxy fight. Six Flags was delisted from the New York Stock Exchange in April.
The shares fell 9 cents, or 36 percent, to 17 cents at 3:59 p.m. New York time in over-the-counter trading on volume of 21.3 million shares, more than eight times the stock's three-month daily average.