More bad news for SF, parks may not bring in as much money

[Bob O]

Six Flags Gets Bids for Parks That May Disappoint Investors

By Josh Fineman and Dana Cimilluca

Nov. 10 (Bloomberg) -- Six Flags Inc., seeking to reduce its $2.2 billion of debt by selling theme parks, received bids for the properties that may fall short of investors' expectations, two people briefed on the matter said.

Buyout firm MidOcean Partners and theme park operator Herschend Family Entertainment Corp. offered less than $650 million for the six locations, said the people, who declined to be identified because the process is private. Real estate investor CNL Financial Group offered at least $650 million, one of the people said.

Six Flags, the second-largest U.S. theme-park operator with 30 properties, may need $800 million to sufficiently lower debt ratios, according to analysts including Merrill Lynch & Co.'s John Maxwell. Chairman Daniel Snyder, who owns the Washington Redskins professional football team, is trying to cut the debt load and reverse a 20 percent drop in Six Flags stock this year.

``The market will be disappointed if meaningful proceeds are not achieved,'' Barbara Cappaert, an analyst at Montpelier, Vermont-based KDP Investment Advisors, wrote in a Nov. 3 note to clients. ``Asset sales are critical to gaining investor confidence.''

Six Flags spokeswoman Wendy Goldberg declined to comment. Ted Virtue, the chief executive officer of MidOcean, which has offices in New York and London, didn't return a call. Carolyn Gosselin, a spokeswoman for Orlando, Florida-based CNL, didn't respond to a voice-mail message left at her office late yesterday.

``We are looking at selected Six Flags properties and doing research,'' said Lisa Rau, a spokeswoman for Atlanta-based Herschend, an operator or partner in theme parks in seven states, including Dolly Parton's Dollywood in Pigeon Forge, Tennessee, and Silver Dollar City in Branson, Missouri. She declined further comment.

Bid Deadline

Six Flags unveiled plans to sell the parks in June. Bids were due Nov. 7, the people said. Shares of the company fell 26 cents, or 4 percent, to $6.18 in New York Stock Exchange composite trading yesterday. The stock is down 85 percent from its record high in 1999.

Six Flags' credit-default swaps, financial instruments that insure against a default, have fallen during the past month as investors anticipated the parks would be sold. Swaps based on $10 million of Six Flags bonds have decreased 22 percent to $527,500, from $680,000 on Oct. 10, according to data compiled by Credit Market Analysis.

Credit-default swap prices decline when investors consider a company less likely to default on its debt.

The company's $502.6 million of 9.625 percent notes due 2014 climbed 5.6 percent in the same period to 94.75 cents on the dollar, according to Trace, the NASD's bond-price reporting system. The yield, which moves in the opposite direction, fell to 10.7 percent from 11.7 percent.

Snyder, the company's largest investor, won a three-month battle with former CEO Kieran Burke for control of Six Flags last year.

Losses Pile Up

Six Flags, which ranks behind Walt Disney Co., has lost $884 million over the past seven years amid falling attendance and spending on new rides, and Burke's plan to sell the company last year failed. Six Flags on Nov. 2 reported third-quarter net income of $164.7 million, a 16 percent drop from a year earlier. Sales fell 1 percent to $540.7 million.

The company's senior unsecured debt is rated Caa1 by Moody's Investors Service and B- by Standard & Poor's. Securities ranked below Baa3 at Moody's and BBB- at S&P are considered non-investment grade, or junk.

S&P, which is reviewing the company's ratings for a downgrade, said in a Sept. 18 note that that it's unclear if the park sale will ``yield a reduction in leverage.''

The six parks are in Los Angeles; Seattle; Denver; Houston; Concord, California; and Buffalo, New York.

Six Flags is trying to draw more families to its properties by banning smoking, planting flowers and spending $60 million on hiring. The company is also adding entertainment including fireworks shows and parades.

To contact the reporters on this story: Josh Fineman in New York at jfineman@bloomberg.net ; and Dana Cimilluca at dcimilluca@bloomberg.net .

Last Updated: November 10, 2006 07:09 EST

[BP317]

SF should pay the buyer to take some of these parks off their hands...however it goes they need to get rid of them.

[Bob O]

I dont think they should give the park away, but they need as mash money as possible to pay down the large debt they have.

I wish the company that was interested in buying these 6 parks would buy SFGAM instead. Dollywood is a very well run park and I had a great time this year at the park. And Ive also heard good things how they run there other parks that I think it would be good for SFGAM to get out from under SF's managment.

[zjohn1988]

^I agree 100%

[Trailblazer Tony]

^Likewise! I would almost prefer to have a small company who takes the time to theme attractions and add quality attractions like Dollywood. No bash against Six Flags or anything, but the family ran parks always seem to have so many unique and overthemed rides! Just look at Mystery Mine and Mountain Slidewinder at Dollywood....

[coastercrazy]

^I think disney even falls into that category. They spend so much time on being unique and well themed that they forget to go for an extreme thrill.

[Trailblazer Tony]

^Which (In case no one can tell by Trailblazer being my fav.) is what i generally go for. But lately, Six Flags...especially with their kiddy Sections...have been improving in this area.

[Chitown]

Just so you know, Herschend Family Entertainment Corp. (the company that owns Dollywood), did not include Magic Mountain in their bid. They offered a certain amount for the other 5 parks on the selling block.

[Bob O]

The amount of money it would take to make SFMM family friendly would be enormous!!! Not worth the money when you add the cost of the park itself to the mix.

[Director_Guy]

^

[Imeanbusiness]

SFGAm is not going anywhere, Shapiro did crown her as the standard of the company.

[Galvan]

"If you want to crown them then crown there ass!"

[RBull4life]

^Ahh yes, good old Dennis Green. That comment will be forever burned into my mind.