SF Reckoning Day

[BP317]

http://biz.yahoo.com/ap/081017/six_flags_piers_dividend.html?.v=1

Six Flags is required to redeem the outstanding PIERS on Aug. 15, 2009. The full liquidation amount is $287.5 million plus accrued and unpaid dividends.

Not that this is news, but SF is pretty screwed .

[FParker185]

yep, and they cant just take out more credit to cover that, not that in these times anyone in their right mind would extend a line of credit to Six Flags. But they need cash money and they need it fast. I think we are fast approaching the 11'th chapter of the Six Flags Story

[demonbulleagle]

so I put my money on Cedar Fair buying GAm

[yamcha]

I would rather Gurnee buy the park, they have more then enough money to take care of the park.

[UWW-10]

I'm almost confident that Cedar Fair is in no shape at the moment to acquire more parks...their hands are full enough as it is.

Someone correct me if I'm wrong, but filing Chapter 11 bankruptcy doesn't mean Six Flags would have to give up the park. Usually, Chapter 11 means that some kind of court helps to reorganize the debt while the debtor still tries to run the company/business. However, if they filed Chapter 11 they would most likely be de-listed from the Stock Exchange.

[cycamps]

We've already talked several times about who we would like to buy the park. This topic has nothing to do with that.

It's unfortunate that Six Flags has to go through this. I suppose they're struggling just like any other company is right now. It'll be interesting to see what their next move is going to be.

[demonbulleagle]

I'm still unclear about how they got in so much debt? Was it just because of Vekoma or was it more?

[FParker185]

I don't see what Vekoma has to do with anything what so ever.

But Six Flags got so in debt cause Premeir bought Six Flags entirely on a line of credit, than after that 1.8 or whatever billion dollar escapade along with assuming Time Warners SF related debt, they started installing nothing but huge expensive thrill rides, and those thrill rides attracted teens and drove away families and with that revenues dropped in a big way, and attendance dropped at most parks, and here we are today. A new regime trying to turn stuff around by re attracting the families that have abandoned the park over the past decade.

[FParker185]

was going to edit, but will be better with a new post to this thread, but out of curiosity I'm reading the 2008 annual report for SF and I find some disturbing stuff...

First off on Page 18 under risk factors, I find this....


We have a history of net losses and expect to
continue to experience net losses. Consequently,
we may not have the ability to implement our
strategy for achieving growth and otherwise
finance future operations.

then in the explanation it says,

We have had a history of net losses and expect to
continue to report net losses for the next several years.
Our net losses are principally attributable to insufficient
revenue to cover our relatively high percentage of fixed
costs, including the interest costs on our debt and our
depreciation expense.We expect that these expenses will
remain significant.We reported net losses of $61.7 million,
$464.8 million (which included a $287.9 million loss from
discontinued operations), $110.9 million (which included a
$2.1 million, loss from discontinued operations),
$305.6 million (which included a $97.6 million, loss from
discontinued operations), and $253.2 million (which
included a $9.1 million loss from discontinued operations)
for the years ended December 31, 2003, 2004, 2005,
2006, and 2007, respectively. Continued losses could
reduce our cash available from operations to service our
indebtedness, as well as limit our ability to implement our
operating strategy and otherwise finance our operations in
the future.

-end-

So right there, in the header and the last line it basically says, we probably wont have enough $$ to stay in business for long unless something pretty awesome happens.

next up still under risk factors...

New Executive Officers/Board of Directors—Our
new management does not have proven success
with Six Flags.

A substantial number of our senior management team,
including our Chief Executive Officer, and all but one of our
directors have been in place only from and after December
2005. They do not have previous experience with us or the
theme park industry, and we cannot assure you that they
will fully integrate themselves into our business or that they
will effectively manage our business affairs. Our failure to
assimilate the new members of management or the directors,
the failure of the new members of management or the
directors to perform effectively or the loss of any of the new
members of management or directors could have a material
adverse effect on our business, financial condition and
results of operations.
-end-

So what that says in a nutshell is, everyone from the old management sucked so we got rid of them, but everyone in place now really has no idea what they are doing as it relates to Theme Park operations, so we may f this up badly.

Now still under risk(this is huge, gotta abbreviate)..

Substantial Leverage/Stockholders’ Deficit— Our
high level of indebtedness and other monetary
obligations require that a significant part of our
cash flow be used to pay interest and fund these
other obligations.

As of December 31, 2007, we had a stockholders’ deficit
of $252.6 million, which means our total liabilities exceed
our total assets.

We have a high level of debt. Our total indebtedness, as
of December 31, 2007, was approximately $2.26 billion,
excluding our Preferred Income Redeemable Shares
(“PIERS”).
-cut out some stuff-
We are required to redeem all of our outstanding
PIERS on August 15, 2009 (to the extent not previously
converted into shares of our common stock) for cash at
100% of the liquidation preference ($287.5 million), plus
accrued and unpaid dividends.
-cut more-
Although we are contractually committed to make
approximately CAD$15.4 million of capital and other
expenditures at La Ronde no later than May 1, 2011,
the vast majority of our capital expenditures in 2008 and
beyond will be made on a discretionary basis. We spent
$115.6 million on capital expenditures for all of our continuing
operations in the 2007 calendar year and we plan
on spending approximately $100.0 million on capital
expenditures in 2008.
-another cut-
Our high level of debt, stockholders’ deficit and other
obligations could have important negative consequences
to us and investors in our securities. These include:
• We may not be able to satisfy all of our obligations,
including, but not limited to, our obligations under the
instruments governing our outstanding debt.
• We could have difficulties obtaining necessary financing
in the future for working capital, capital
expenditures, debt service requirements, Partnership
Park obligations, refinancings or other purposes.
• We will have to use a significant part of our cash flow to
make payments on our debt, to pay the dividends on
preferred stock (if we choose to pay them in cash), and
to satisfy the other obligations set forth above, which
may reduce the capital available for operations and
expansion.
• Adverse economic or industry conditions may have more of a negative impact on us.
-cut more-
We expect to refinance all or some of our debt or secure
new financing. We cannot be sure that we will be able to
obtain the refinancing or new financing on reasonable
terms or at all. If we are unable to obtain financing in
the future, or to do so on favorable terms, it could have a
negative effect on our operations and our liquidity. If we are
unable to satisfy our obligations, we will be forced to adopt
an alternative strategy that may include actions such as
selling assets, restructuring or refinancing indebtedness or
seeking equity capital.We have agreed in the Credit Facility
and the indentures covering our outstanding notes to
limit the amount of additional debt we will incur.

I'm going to stop now cause it's reading like a stephen king horror novel, but what it starts off saying is we owe more than we are worth, meaning if they sold every single thing Six Flags owns at the actual assessed value, there will still be leftover debt. Then everything else pretty much keeps saying, we may not have the $$ to keep operating, and if we dont come up with the $$ to pay off the debt due when it's due, we will have to sell whatever we can to cover it unless we can beg someone to inject capital into the company and pay our debt for us.

Then it gets into numbers that are equally scary. So yeah, SF has alot of issues, and it's not going to go good, but either way it should be pretty interesting to see what happens.

[BP317]

New Executive Officers/Board of Directors—Our
new management does not have proven success
with Six Flags.

A substantial number of our senior management team,
including our Chief Executive Officer, and all but one of our
directors have been in place only from and after December
2005. They do not have previous experience with us or the
theme park industry, and we cannot assure you that they
will fully integrate themselves into our business or that they
will effectively manage our business affairs. Our failure to
assimilate the new members of management or the directors,
the failure of the new members of management or the
directors to perform effectively or the loss of any of the new
members of management or directors could have a material
adverse effect on our business, financial condition and
results of operations.
-end-

So what that says in a nutshell is, everyone from the old management sucked so we got rid of them, but everyone in place now really has no idea what they are doing as it relates to Theme Park operations, so we may f this up badly.

Theres something to be said for this. If you havent been around the industry dont know the ins/out and patterns of the business you shouldnt be running the company and that goes for all industries. A lot of the financial management by Six Flags even after 2005 has been laughable/rediculous. It was painfully obvious in 2006 that the way the park was run they had no idea how to budget anything. I think 2007 was probably the best looking ive ever seen the park, then Shapiro realized a lot of what they did in 07 they werent seeing a profit off of and cut a bunch of it in 08 and the park sucked again.
That being said SF was doomed before the "Shapiro era" and theres really not much he couldve done to change that.

[Ilovthevu']

I'm still unclear about how they got in so much debt? Was it just because of Vekoma or was it more?

Under the old management, they bought tons of parks, and eventually sold some of them. They added new rides to these parks which is a waste, and they are now gone. They continually buy rides year after year, and never make enough money back from the rides they invested in. The season prices today are way too low. You can go to the park tons, and tons of times, and not spend any extra money. A person that goes only twice can get a whole season for about the same price. That is stupid!

Think about how much money it costs for them to run just the bumper cars for a year with one person running it. It costs probably around $12,375. That's not maintenance including broken parts, and electricity. That's one small little dinky ride with usually only one person working. It's unlike Batman the Ride which could have 6 people working the ride (with locker people, and flash pass).

You add workers for the rides, landscape, security guards, cops (They must get paid.), characters (whether Justice League or Fright Fest), cleaning walkways, mechanics, water, bathroom cleaning people, theatre performers, and so on. The point is that there are a lot of workers that are paid for by your admission alone. Yes, there are game employees who get paid by your game money, or food people that get paid by that, but there are a lot of other people who you are essentially paying when you walk through that turnstyle.

[RBull4life]

You know, Six Flags should install a new mega million dollar high thrill coaster at Great America, instead of some stupid family ride to help boost attendance. That will help right?

[FParker185]

Help pound the final nail in the coffin maybe

[yamcha]

Am I the only one who thinks that the main reason they are in that much dept is because of those max thrill rides?

HOnestly how much of that was Bull, V2, Vu, All of South west, Spy girl, Batman stunt show, Marti graw (sp?)
and all thoes Justice League people?

I mean really, did they even make enough back from any of them the season they started?

[BP317]

/\ No, theres no way theyd make back all the cost for a ride like Raging Bull in one season, they dont even plan on it.

[FParker185]

on average it takes 3-5 years for a major investment to pay itself off.

so when SF was adding a major attraction at most parks every year and sometimes 2, well you do the math.

[tp41190]

Plus wasn't there main reason for debt was the fact that everything was on credit...coudnt pay it off...then the interest kept building up...yet still adding coasters?

[FParker185]

yeah, Premeir Parks bought the entire Six Flags chain along with all existing debt on a line of credit for I believe 1.8 billion, the other billion was all those coasters, park purchases and interest.

[Bob O]

Sf is suffering from many years of lousy management, and that sadly hasnt changed.
While Shapiro has had some good idea's, you dont hire someone from espn to run a theme park company, if you want to hire someone from disney, hire someone who was directly involved in the theme park business.
For too many years the company thought bigger was better, and build it and they will come mentality, and that has proven a disaster.

[RBull4life]

Wow Bob, your on a roll.

[JordanSDMF]

Six Flags sucks. It's simple. If you can't balance out the family aspect, and the high thrill aspect of a theme park without making it suck so hard, then you just suck. You know Busch Gardens Africa? High Thrill & Family Fun. There is a safari ride, and then there is SheiKra. There is a bunch of little animals, and then there is Kumba. There is nice restaurants, and then there is Montu. See what I mean?

At six flags, there is crap food, and then Raging Bull. There is Wiggles World, and then there is V2. It is just all sectioned off. Instead of wiggles world, I think a nice big flat could have been put in there, and wiggles world could have been spread out through the park. You know what I mean? Not literally Wiggle's World, but the idea of it.

Six Flags has horrible management, and I don't foresee that ever changing. You NEED high thrill and family fun to have a successful theme park, and Six Flags just can't implement both while doing a good job.

[Jerrykoala2112]

I like the idea of everything being spread out instead of just having one little kids are. you could say oh, ,we have 50 kids ride instead of saying 3 themed kids areas.

It hink the building of the major coasters brought them down. Year after year and sometimes 2-3 years one major coaster. Every 3 years should be a coasters. Maybe a small one this time and in 3 years a bigger one. Dont spend too much money and spend even more when you arent even making half as much.

[SFaddiction84]

Maybe Six Flags Inc should consider selling off all but the TOP 5 parks! One can always say you own to much of a good thing. So maybe Six Flags should Down Grade to the top 5 parks and focus all of there time and energy there, use all the money from the SALES and put it right onto the debts.

In 10 or 15 years, If Six Flags is in better shape, they can then open or acquire new parks if need be but for now, i think they need to shrink to a manageable size and focus on the few they have.

[Jerrykoala2112]

Yea the 5 they should keep should be

1.Great Adventure (duh)
2.Great America(high in profit)
3.Over Texas(was first and high attendancece)
4.Over Georgia(one high profit park)
5.Discovery Kingdom(Magic Mountain is poor location and so many local theme parks around their.)

[Coastermonkey61]

Those would be the five I'd pick, maybe a 6th with St. Louis